Choosing the Right Credit Card

How do you choose the Credit Card that is right for you?

It's time to Choose a Credit Card. This could be your first credit card, or you could be looking to get a better deal than you're getting from your current credit card. Where do you start? Here, we try to give you the basics that will steer you in the right direction.

About You

The first place to start is look at your own circumstances. If you're a student or you have poor or no credit history, then your choice will be limited and you're unlikely to qualify for a range of credit cards that may offer features such as interest free balance transfers or new purchases. If you're a student, then there's a range of Student Credit Cards available. If you don't have any credit history or you credit history is adverse (including a history of County Court Judgements), then there's also a range of Bad Credit Credit Cards cards that are available to you. If you do have poor credit history, then it's worth looking to Improve Your Credit History.

Do You Want to Pay Off Another Credit Card Balance?

Balance Transfer Credit Cards have been very popular in the last few years. They allow you to transfer balances from other credit cards and have interest-free credit for a period of time, sometimes for as long as 16 months (see Virgin Credit Card). Some cards, for example, the MBNA Platinum Plus Credit Card allow you to transfer money to your bank account. In the early days, these balance transfers were completely free; however you're now charged a balance transfer fee, typically around 1.5%-3% for balance transfers to credit cards and 4% for transfers to your bank current account. At the time of writing, the Play.com Credit Card was offering the lowest balance transfer fee of 1.5% for balance transfers up to 6 months.

Are You Looking to Buy Something on Interest Free Credit?

0% Purchase Credit Cards are similar to Balance Transfer Credit Cards in that they offer you interest free credit for a period of time. The benefit that they have over Balance Transfer Credit Cards is that there are no fees involved, so the cost of the credit is truly zero. At the time of writing, the NatWest Classic Credit Card was offering 0% on new purchase for 9 months. Of course, all credits offer an interest free period on new purchases ranging between 45 an d 59 days; provided that you pay your balance of in full by the payment due date.

Will You Pay Your Balance Off in Full Each Month?

APR is a ket factor in choosing your credit card. It's an interest rate that must be quoted to allow you to compare any time of loan. A credit card may have a high APR because it is aimed at people who do not have a good credit history. Some premium credit cards also have a high APR because they charge an annual fee; however, this is usually compensated for in the benefits that they offer you. If you pay your balance off in full each month, then the APR becomes less of an important factor to you and you'll be looking at some of the other benefits that may be available to you such as Reward Points, Cashback or Travel Benefits.

Earning Reward Points

Rewards Credit Cards offer you the chance to earn reward points as you spend. The card you choose is really dependent on what kind of rewards might suit your lifestyle. If you're interested in a reward points credit card, then browse through the Rewards Credit Cards that are available and choose the card that suits you. Given the range of rewards that may be offered, there aren't really any hard and fast rules to determine the real benefits that these crds bring; however, we'd say that the typical benefit that these provide is around 1% of your spend.

Getting Cashback

Cashback Credit Cards or Moneyback Credit Cards are similar to Rewards Credit Cards in that you're rewarded as you spend on your card. Less common than they were, we like Cashback Credit Cards as they give you real cash in your pocket and do not have some of the restrictions that you might find with a Rewards Credit Cards. At the time of writing, the American Express Platinum Cashback Credit Card offered an amazing 5% cashback on purchases for the first 3 months and this is by far and away the best deal we've seen on any cashback or rewards card.

Travel Benefts

If you travel a lot or go on holiday abroad, then it's worth looking at Travel Credit Cards. Many of these credit cards work in a similar fashion to Rewards Credit Cards, such as collecting Airmiles. Other benefits might include free travel insurance or no foreign exchange fees. We particularly like the Santander Zero Credit Card as, at the time of writing, it made no charge for foreign transactions; that's a typical 2.75% saving on your foreign spending over most other credit cards.

Conclusion

There are many times of credit cards available and the card you choose really is dependent on your own personal circumstances and the types of benefits that your looking for.

For more information on the topics discussed here, check out our other articles.

Read more Credit Card Articles by MyCreditCardGuide.co.uk

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