Making the right credit card choices is essential to your future credit score and health of your finances. Everyone has different spending habits, budgets, and lifestyles, which makes the process of finding the “right” credit card a difficult process. However, by reading this quick guide and doing follow-up online research, you will have a much easier road ahead of you.
The right credit card for your lifestyle
If you are someone who revolves a balance credit card debt then you should focus on credit cards that offer low interest rates on balance transfers and put a stop to new charges. Alternatively, if you pay your balance in full and on-time every month, a cash back credit card would be better suited to your lifestyle with an attractive cash rewards program and no annual fees. Your lifestyle can open other opportunities for how you decide between cards. For example, if you spend a lot on holidays or are a regular traveller, then you should look for a card with flights and lodging rewards.
Introductory rates and rewards
The glitzy offers or advertisements you see from credit card companies can draw you in as they show attractive introductory rates or rewards programs. However, you should make sure to read the fine print carefully as in many cases these offers will expire and you will be stuck with a credit card that in the long run may not be beneficial to the services you require. It is therefore important to read the small text as not doing so is similar to going into a relationship blind as you may face charges that you didn’t originally know about or the rewards offered may have some limiting features.
Annual fees
You should calculate as to whether paying an annual fee for a credit card is worth your while with the services that are provided by the card. Rewards cards, Gold and Platinum cards, can charge more due to the services offered and the perks the customer receives as a cardholder. If, however, you do not need or will not use the features offered or only got the card because of one particular card, it can be a good idea to switch to a card more suited to your lifestyle or a low or no annual fee card.
Overseas transactions
If you travel a lot overseas or you buy items from overseas retailers, you will have noticed that your bank charges you for the transaction and conversion fee. Some credit card providers offer free cash withdrawals abroad or charge a set fee on purchases made abroad. While the charges may seem small and insignificant, they can really add up over time and therefore you should look into getting a credit card that charges less or nothing at all for overseas purchases.
Keep it Healthy
One of the biggest ways you will lose out on a credit card’s benefits and services is when you don’t meet the monthly payments repeatedly. If you fail to meet the payments on your credit card, this can cause you problems in the future when applying for a new card or loan. Make a conscious effort not to overspend. It can be tempting to think that it is free money or you will pay it all off later but you should keep to your personal budget. Not only will this help to grow and improve your credit score but it will mean that your finances are healthier.
Choosing a credit card can be difficult as many seem to offer the same services or rewards and it can be hard to distinguish between the different cards. A good place to start is with websites such as, credit.com.au comparison site that allow you to compare the features of a card in one single screen. Using comparison websites and researching into the possible options is the best way to ensure that your credit card meets your needs and unique situation. Just as important, you need to prepare yourself. Make a list of your monthly out-goings in order to see where you spend most of your money. This knowledge will not only help you better manage your finances, but can help you determine what cards (and reward systems) might best serve your spending habits.
