Credit cards and shovels have a lot more in common than one may think: both are incredibly useful tools that can dig you into a hole if you don't use them wisely.
The old adage-"Choose the right tool for the right job"-certainly applies to both.
With so many different cards to choose from, how do you find the right one to suit your lifestyle and financial situation? Below are a few important factors to consider that will make the comparison a little less daunting: Your Spending Habits How do you intend to use this tool? Will you be paying the balance on time and in full each month, or do you anticipate carrying a balance? Will you use your credit cards to pay for everything, or just in case of emergency? •If you'll be paying off the balance each month, the card's interest rate isn't really relevant.
Look for a card that offers a longer grace period and no annual fee, or an Aussie credit card with perks like Frequent Flyer Rewards.
•If there's a chance you'll be carrying a balance from month to month, look for the lowest possible interest rate and a low introductory rate.
•If you'll be using the credit cards for most of your everyday purchases, look for a card that offers a generous credit limit and attractive rewards.
•If you'll be using the cards for emergencies only, opt for a no-frills, no annual fee card with a low interest rate.
The Interest Rate A credit card's interest rate is either fixed or variable.
With fixed, you know what the rate will be from month to month; with variable, the interest rate fluctuates, usually in accordance with the prime rate or another financial indicator.
Even an Aussie credit cards with a fixed interest rate can increase if your payment is late, you go over your credit limit, or simply because the card issuer wants to increase it.
Yes, this can happen! Fees and Penalties There are many potential sources for fees and penalties, including balance transfers, cash advances, credit limit increase requests, late payments, annual fees, payments made by phone, or exceeded credit limits.
Choose a card with reasonable fees, and don't pay extra to participate in a rewards program.
Rewards and Incentives Rewards programs can offer some attractive benefits, as long as there are no fees and you're using the credit cards for planned purchases and not simply to receive the rewards.
Look for a flexible program that offers rewards you'll actually use, such as cash or travel perks.
Make sure the incentives can be easily redeemed and have generous expiration restrictions.