I’m sure you all know by now that credit cards are not my favourite of inventions. That said, the harsh truth of this world of ours is that sometimes we forced to have one. The necessity of credit cards when hiring cars is one of life’s cruel ironies as far as I am concerned. So how to pick one? What should be the major things you are looking for? Read on for some tips and tricks on the search for the best credit card, inspired by Yahoo! personal finance.
Interest Rates
Your first port of call when you’re looking at picking up a credit card is, of course, the interest rate. All things going well, you’ll never need to engage with the interest rate because you’ll be able to pay off your balance by the end of the month. But, just in case, you need to know which one is going to work best for you. A couple of things to think about- is the rate fixed or variable, will it change after a certain amount of time or when a certain amount is on your card, and will it be different for cash advances?
Billing Cycle
Generally, the longer the interest free period the better. The reason for that is clear- the longer you have before you start being charged interest and can pay off your purchases, the better. It’s also important to know about the billing cycle and when it ends. For instance, if you have a card with a 55 days interest free, that doesn’t automatically mean you have 55 days to pay it off. For some cards, the amount could be due at the end of the billing cycle, which could be next week. It’s an important thing to check before you sign up.
Fees
Fees aren’t necessarily a case-closed. Sometimes, the cards that carry a higher annual fee will have the benefits to go with it- such a frequent flyer points or shopping vouchers and the ones that don’t have fees will have an interest rate that will leave you gasping. Use an online comparison to see the commensurate benefits. It’s also a good idea to look at what advantages are possible to tie in with programs you’re already involved with.
Expiry Dates
Make sure you read the small print because the interest rate can often be an introductory one, and it’s important to know the expiry date. I often get credit cards for back up when I travel overseas, and so am using them only as a short-term option and the expiry dates don’t matter. But if you’re signing up for the long haul, you need to know what it’s going to look like in a year’s time.
Minimums And Penalties
Credit card companies will often have a minimum monthly repayment, and a penalty if you miss it. If you can’t pay a monthly repayment, then perhaps you should reconsider the whole credit card idea. And you should be aiming to pay it all off in full before the billing cycle is over. But for the emergency back-up, look at one’s that have low repayments or a no-late-fee policy.
Specialised Cards
If you happen to be a student, traveller or business person, there might be a credit card specially tailored for you and offering a great deal. It’s well worth talking to a bank or doing a bit of online research about it.
Founder, Savings Guide
Personal Finance Blogger
Alex (A.J.) Wilson is the founder and head personal finance writer of Savings Guide (a registered Australian company with ASIC).
Alex has 12+ years of experience commenting on personal finance in Australia with major media publications including Sydney Morning Herald, News.com.au, The Daily Telegraph, The New Daily, Your Mortgage and more.
Alex is regularly featured on Channel 9, Channel 7 and ABC Radio as a leading consumer advocate.
Holding a degree from the University of Sydney (UTS) in Communications and Information Management, Alex is based in Sydney Australia and works full time while simultaneously running Savings Guide to help Australian’s make smarter personal finance choices.
Follow Alex on Twitter, Facebook, YouTube or LinkedIn. You can also contact Alex by email.
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