Credit cards can be helpful products that can enhance your lifestyle, but they can also be equally damaging if you don’t understand what you are getting into.
Added to that, there are so many different credits on offer from a range of banks – all boasting different benefits and perks for choosing them.
To assist you in making the wise choice, and avoid getting into credit card debt that could negatively impact your budget and credit record, we have compiled some tips on what you should consider before applying for your credit card.
Financial need and requirements:
The first thing you need to consider is what you will be using the credit card for. Is it for emergency finance needs? Is it for travel and abroad? Are you looking to make a purchase? Considering this will make a big difference when it comes to the impact that the credit card has on your finances.
Interest rates, fees and charges:
These fees are essentially what you will be paying on top of your spend. Interest rates can vary from card to card, or bank to bank, and it is important to consider whether you want a fixed rate, or a variable rate – something that you should discuss in more detail with your banker. You also need to be aware of all fees and charges – from what it will cost you to withdraw cash from an ATM, paying for purchases abroad or any other monthly fees that you may be liable for.
Set your limit:
As with any credit, a lot of people are tempted to go for the maximum amount that they qualify for. However, this creates a situation where you could easily overspend, and end up with instalments that put your budget under pressure. Decide on a limit that suits you, and should you need more finance at a later stage; you could revisit your bank and discuss limit increases.
It may be convenient for you to have all your accounts with one bank, but with online facilities so widely available now, it is easy to manage accounts with different banks. Compare the options available at a variety of banks and make sure you don’t miss out on a better deal.
Discounts and benefits:
Credit cards can come with a range of discounts and benefits. When dining out, you may get major discounts by paying with your card, while travel discounts and insurance may be bundled with the card. It is important to get a list of the benefits and discounts offered, as it will go a long way in helping you get the most out of your credit card usage. You should also stay up to date with current promotions that are time sensitive so that you don’t miss out.
As with any credit, you should consider things carefully and make sure that you are responsible with your spend. It is always advisable to discuss your options in detail with your banker so that you understand things fully.
This is a guest post by Jason.