What to Consider Before Getting a Credit Card

Credit cards are generally very helpful financial tools. You can use them to buy things, of course, but they can also provide you with interesting financial analytics and even some great rewards. Before you commit to one, though, make sure you consider the following.

How You’ll Be Using It
The reason you can’t listen to any one-size-fits-all advice about credit cards is because no option is going to work well for everyone. Each person needs to consider how they will be using their card before picking one.

For example, if you know you’ll be regularly carrying a balance, then it’s absolutely essential that you select one with a low introductory rate and the lowest possible interest rate. Otherwise, you’ll soon find yourself under a mountain of debt.

Likewise, if you’re confident you will pay the bill in full every single month, then it’s less important what kind of interest rate your card comes with (you better be sure about your ability to pay the balance, though). Instead, the credit card for you will be one that lacks an annual fee and offers you a longer grace period, so you don’t end up with a finance charge.

Some of you will use your credit card to handle the majority of your purchases. This is fine, but then you’ll need one that has a generous limit or you may hit the roof before the month is out. Try to find one that has a great rewards program too, and your spending could actually put money back into your pocket.
Finally, most people have a credit card they will only use in case of an emergency. One with a low interest rate and low fees is best for this.

Its Interest Rate
This should probably go without saying, but the interest rate on your credit card is going to have a huge impact on your finances – either for better or worse. It will be listed as your annual percentage rate (APR) and is either a variable or fixed rate.

You really need to read the fine print on a card to understand how your APR will work. Variable rates will obviously change, but fixed rates can too, depending on the agreement you signed. Not paying off an entire balance, for example, may trigger a rate change. This is not the kind of surprise you want on your monthly bill.

The Credit Limit
The credit limit on a card is just how much the credit card company is willing to “lend” you. While you may want the highest limit possible, that will involve a number of stipulations. Also, if you know that you sometimes have problems with your spending, you may want to pick a low limit just to thwart any potential impulsive purchases before they can happen. Just be sure you don’t go over that limit accidentally, as it may affect your credit score.

Take your time in choosing a credit card so you don’t end up with something that turns into more of a burden than a blessing. The above steps will help you pick one that helps your finances instead of hurting them.

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