Important Factors to Consider Before You Select a Credit Card
Tuesday, March 19, 2019, 6:00 AM | Leave Comment
A credit card can seriously help when you don’t have the cash. Many companies will offer you luring credit card offers that may be quite tempting to sign up to almost all of them. This can be such a big mistake.
Before filling those credit card forms, you should be sure that you are financially stable to take on the credit card responsibilities. Credit cards can be beneficial if they are correctly handled.
Sometimes it can be difficult to repay the debt, this is why it is necessary to write a credit card hardship program letter to let the bank give you some time or come up with an amicable solution.
The following are some of the factors that you should consider before choosing a credit card.
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Do you really need the card?
This is the first question that you should ask yourself. Do you really need it? If you are planning to get a card to build credit card, then you need to act responsibly with the card and repay the debt in full each month. In other words, when taking a credit card, you should still stick to your budget.
If you are getting a card to purchase something that you seriously don’t need, then you are better off without the credit card. You should not apply for the card.
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Credit limit
A credit limit is the amount of money that you can access from a credit card issuer or in other words, the amount that the credit card issuer is willing to let you borrow. It can be a small or a bigger amount of money depending on your credit card history. Maxing out your credit limit can hurt your credit score and make the credit card issuer to cut your credit limits to an amount that is lower than your current balance.
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The interest rate
When it comes to credit offer, the interest rate appears as Annual Percentage Rate [APR]. It can be a fixed-rate or variable rate that is tied to another financial indicator. The fixed-rate card allows you to know the interest rate that will be charged throughout the months that you will be repaying the debt. Variable rates actually fluctuate sometimes.
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Fees and penalties
The bank/credit card issuer has several ways to make money off you. The popular charges include transaction fees such as balance transfers, cash advances, etc. There are also penalty charges that you may incur when you pay the debt late or when you go past your credit limit.
Before you select a particular credit card, ensure that it has reasonable fees. You should choose credit card which does not have transaction fees. Don’t pay an extra fee for rewards because there are several card issuers who don’t charge extra for the rewards.
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Limit the number of your credit cards
The rule of the thumb is that you should only have one or two credit cards. Having more than this number can make you feel overwhelmed with debt. To be on the safer side, you should have one credit card and strive to pay it off every month entirely.
