Credit Misplace

Choosing the Right Card

There are literally hundreds of credit cards on offer in the US, and the list is growing daily. So, which is the best on offer? It very much depends on how each person plans to use their card. The answer lies in asking one simple question; “What do I want to use a credit card for?”

1. For purchases, and to spread the cost of these purchases over time

2. As a source of spending in between paydays

3. To pay off non-credit card debts
Not a Debt Solution

If your answer is number 3, stop right now. Credit cards are not designed as a debt solution. Anyone seeking relief from debt should contact their bank or a debt advisory service, such as National Debtline, for free, independent advice.

1. The Popular Answer

All credit card companies hope potential customer will choose answer 1, because that’s the way they make their money. By making purchases, the card holder borrows money from the credit card company, which incurs interest every month. The longer the card holder takes to pay it back, the more interest they pay.

2. The Unpopular Answer (for the credit card companies)

Answer 2 presumes that, come payday, the card holder will pay off all they owe in full and start again afresh the next month. These card holders are, in effect, borrowing money for free, IF the credit card allows an interest-free period of no less than 30 days. Without an interest-free period, interest will be charged.
An Interesting Way to Spend

Since the advent of Chip and Pin, credit cards have become a safe, reliable and easy way to purchase almost anything in person. Online, if used with care, they also offer a secure and effective way to purchase anything from anywhere in the world.

For a card holder who doesn’t intend to pay off all their debt at the end of the month, the most crucial element of any credit card deal is the interest rate. Credit cards interest rates are shown as Annual Percentage Rates (APR’s). Every month, that rate of interest is charged on the outstanding balance on the card. The cardholder can either pay off all the balance due, part of it, or a specified minimum repayment.
Borrowing for Free

A credit card that offers an interest free period is an ideal way to borrow money for free, if the balance is paid off in full at the end of every month. It takes a strong-willed card holder, however, to resist the temptation to spend just a little extra and go over their monthly budget!
More than just Credit

Credit card companies are falling over themselves to attract new customers, and they offer a wide selection of incentives.

0% purchase offers are extremely tempting, and rightly so. For a fixed period, all purchases are interest free, so the card holder need only pay the minimum payment to borrow money for free. The trick is to repay the balance just before the 0% deal expires.

Cashback schemes offer just that; a percentage of the card holder’s spend during the month, given back as cash. For the high spender who repays all or a substantial amount of the balance each month, this is an attractive offer.

Card reward schemes vary in generosity. They either offer reward points, which can be redeemed towards items from their own catalogue, or money off particular items or services. Reward schemes are particularly useful when looking for good discounts on specific products, such as a car.

Balance transfer deals allow existing credit card holders to transfer their debt from one card to another. However, there is a catch; repayments made go against the cheaper interest option first, usually the balance transfer. Purchases attract higher interest and are paid off last.

Insurance deals include free travel insurance for holidays purchased using the card. Purchase insurance is also a useful perk, especially with more expensive goods, but only if not covered by any other insurance policy the purchaser might already have.

A recent bone of contention has been the cost of using a credit card abroad, and especially the high fees charged for withdrawing cash against the card on foreign ATMs. Certain cards offer this service at a reduced cost and are worth seeking out if the user frequently travels abroad.