There are many different types of credit cards from which a person can choose. With so many different options, it is hard to decide on the right card. Some credit cards offer cash rewards based on your purchases while others offer air miles. Some cards are free to use while others charge an annual fee. Some cards charge low interest rates while others charge up to a staggering 25% interest fee. Facing a plethora of credit cards, consumers can have a hard time choosing a credit card. Picking the right credit card should be based on lifestyle choices and how often the card is going to be used.
How to Choose a Credit Card
Most consumers commonly use credit cards to pay for their daily purchases. This type of card is usually offered by a bank and does not require any security deposit or any upfront fees. You can use this type of card to transfer the balance of higher interest credit cards to one with a lower finance charge. Many of these cards offer zero percent interest for a limited amount of time. This can help a cardholder catch up on bills and lower their balance. This type of card may also come with a fixed annual percentage rate. If you're planning to make a large purchase, this type of card is perfect. You will be able to pay off the balance with low or no interest charges and therefore you won't build up too much unnecessary debt. After a certain amount of time, the interest rate will most likely rise. When looking to make a big purchase it is advised that you pay it off as soon as you can.
Different credit cards come with different spending limits. Some are a couple of hundred while others can be as high as a hundred thousand dollars. This is an important factor when choosing a card. If you are going to use it for emergencies or only occasionally then you can get a card with a low limit. If your intent is to make a large purchase then you should choose a card with a higher spending limit.
Credit Card Rewards
Credit cards also offer different types of reward programs. These programs allow someone to earn a reward for using their card to make purchases. They will earn a certain amount of points for the money that they spend. This type of card is for people with excellent credit as the cards usually have tighter approval criteria. There are several different types of rewards that can be earned. Some cards allow you to earn cash back on your purchases. The more you use your credit card, the more money you earn. These cards do have annual fees and the rates will vary. A cardholder can earn anywhere from one to three percent cash back on the total amount of money they charge per billing cycle. If you allow your balance to accumulate over a long period of time you may be able to earn a decent amount of money on your purchases. The number of points you will earn may vary by purchase. In addition to earning cash back, you can earn points that are redeemable for rewards. Rewards can include anything from electronics to hotel stays and even jewelry. Gift cards from popular retail stores may also be a reward option.
Gas credit cards, another type of card, are getting increasingly popular. As gas prices rise, people are looking to save money any way they can. These cards may allow you to save several cents off of every gallon of gas that you purchase. You may even be able to receive anywhere from one to five percent back off the total gas that you purchase. These cards are good for people that drive a lot or commute a long distance to work. The annual percentage rates are usually pretty high so the balance should be paid off quickly.
You may get a credit card earning frequent flyer miles. Every time the card is used miles add up. The miles can be used for a reduced rate airplane ticket or maybe even a free trip. This card is great for people that travel a lot and are required to work with several different airlines.
