Know the detail when selecting a credit card


Credit cards were the source of major problems when the recent financial crisis developed. Credit Card companies had been happy to recruit more and more users with special offers and often increased credit limits unsolicited as people reached their current limits; they did not mind as times were good and the real profit they made was on the outstanding balances left at the end of every month.

They were aware that people often had several cards and encouraged them to switch by offering 0% interest on balance transfers. I couldn’t last and it didn’t. Recession brought unemployment and default. People who were struggling financially used their cards for everyday living until the option closed, either because their credit limit was increased, because that limit was reduced or because they defaulted.

Times have changed and the responsible use of a credit card is still the most convenient way to buy many things. It is also the best way to get a good credit score by regular use but in all situations the full balance should be paid off at the end of each month.

When selecting the best credit card there are a number of factors to consider. First of all there is really no reason to select a card that has an annual fee unless the interest rate is so low and guaranteed to stay there; unlikely.

The small print is very important. Those 0% balance transfers are still available but it is essential to read the small print to make sure that once the 0% period expires the charges are such that it doesn’t make the transfer more costly than remaining with an existing card. Similarly fixed rate low interest introductory offers need to be viewed in the same light; what is the interest rate after the end of the promotional period?

The internet is a great source of comparable information and if the interest rate charges are the most important factor in the selection then the best rates can soon be identified.  Some cards offer rewards and points and it is worth thinking seriously about whether these promotions are value for money or simply tempters to get someone to spend more than they would do otherwise.

There are cards which recognize that someone may not have a good credit score and they will charge for the privilege of providing a card. So many purchases as more convenient with the use of a card, particularly online travel and accommodation so owning a card can be important for people who need that facility.

It may seem strange that someone who has never needed or sought credit through their lives will find it difficult to obtain in middle age because they have no record. While in one way it may seem illogical they will not have a credit score so they will be regarded as a bad risk. A credit card used regularly for small purchases with the monthly balance paid off in full remains the best way to get a credit score and hence the finance that might be needed.

The credit card to select is fairly subjective and varies with the priorities of an individual. Some who are certain that they will always pay back in full at the end of the month may not see the interest rate applicable on month end outstanding balances as the defining reason for selecting a particular card.

What is important is that you read and fully understand the fine print before signing up and that you use the card responsibly at all times. To do otherwise can create sever problems in the future with obtaining credit.

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