Credit cards are something that many of us use and about half of us have outstanding debt on our credit cards. It is really important to make sure that we are using the right credit card to suit our needs. Many of us are not aware that there are different types of credit card and the one that you pick can make a big difference to how much you gain from your card.
If you always repay the money you owe on your card, in full, each month, then this sort of card could be good for you. What it does is gives you some sort of reward depending on how much you have spent. This could be a percentage cashback which is credited to the card to pay towards the next bill, vouchers, rewards points or things like that. What is offered will vary depending on the card issuer and therefore it is wise to check and compare them.
If you are getting reward vouchers or points then make sure that it is something that you will make use of. It can sound great in the information about the card, but think about whether it really is something you will use.
You also need to be careful that you do not justify buying more than you need because you get rewards or vouchers. The amount that you get back will only be a very small percentage of what you spend so only use the card as normal and see any cashback or rewards as a bonus. You also need to make sure you do pay off the full balance each month as the interest charged on these cards tends to be higher than that on a standard card and outweighs the benefits that you get form the rewards.
Interest free card
There are a few companies that offer an interest free credit card and these can be useful in some circumstances. For example, if you need to buy a new white good and do not have the money, you could use the interest free card to buy it and then make sure that you repay what you owe before the interest free period ends.
It is really important though to make sure that you do repay everything before the interest free period ends. Once it ends you will be charged interest and it can be higher than on many other credit cards and so you could end paying a lot more than you would with a standard card.
If you tend to only repay the minimum each month, then finding a card which has a competitive interest rate is the best that you can do. Then you will not be being charged more than necessary for what you owe. It might be tempting to go for an interest free card, but the rates do get very high once the free interest period ends and transferrin a balance to a new card at this point can have charges associated with it which makes it an expensive thing to do.
So it is wise to think about how you use your credit card so that you can pick the one which will suit you the best. Once you have made that decision then you will be able to look at the cards of this type and compare them. It is important to compare the interest rates to see what you will pay should you miss a repayment but also at any other fees or charges they have. Also look at other factors as well such as who the lender is and whether you are happy using them. It can be wise to look at some reviews, both of the card and the card issuer to see whether that impacts your decision.
It is important to be flexible as well because you may find that the card you are using may not always be the best one for you. Therefore, you may need to think about changing cards every so often so you are always taking advantage of the best deal. Every six months or so it is good to research again and see whether there are any cards that would suit you even better. It might feel like a lot of work but it can really worth it with the money that you can save or even gain from doing so. Once you have had a go, it will be much easier the next time and that will help you to do it more quickly next time. If you calculate how much you save from doing it, this could motivate you to be more likely to do it some more! You could even start to do it with other financial products you have, insurance, and utilities and you could end up saving a significant chunk of money. The process is the same for them all and so it should not be too tricky.