When selecting a credit card you should consider what type
of credit card you need as there are several types of credit
cards available, each offering different services, interest
rates and conditions. In general there are following types
of credit cards:
Low Interest Credit Cards
If you are planning to make only minimum repayments on your
credit card this type of credit card is for you. Typical scenario
with this type of credit card holders is: You buy an item
using your credit card but you are not replacing all the money
you used to by that item.
This means, credit card company will charge the interest
on the remaining money you owe to them. As you are always
having an outstanding balance, you should have a credit
card with the lowest interest rate.
For example, if you owe $5000 on your credit card and your
interest rate is 10% you will be paying $50 a month in interest.
If your interest rate is 20% , you will be paying $100 a month
in interest.
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Balance Transfer Credit Cards
Almost all banks and financial institutions offer "Balance
Transfer Credit Cards". By offering better terms and
conditions they are hopping you will transfer your existing
credit balance to them. Often this is a good idea as you
can save hundreds of dollars buy paying no or much lower
interest rate using the services of the new financial institution.
Usually this offer is time limited, for example 6 months at
0% interest rate or 12 months at 5,9% interest rate. Make
sure you know what is the interest rate after the expiry of
the low interest rate period.
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Gold & Platinum Credit Cards
This type of credit cards are generally for people with
higher income. High interest rates and annual fees are associated
with these credit cards. Often your late payment fees are
higher as well as compared to other types of credit cards.
To offset these higher costs you will receive preferential
services including travel insurance, rewards program, frequent
flyers points, etc. Also, having a Gold or Platinum credit
card is a status symbol. apply for credit card
Rewards Credit Cards
This type of credit cards have higher interest rates as
well as annual fees. Also reward program fees are charged.
In return you get reward points which you can use to buy
goods and services or exchange for cash.
If you are planning to spend large amounts of money using
this card and you replace the money spent before the end of
the interest free period, then this is a credit card for you.
If you are disciplined with your money management, you can
obtain items and services for free.
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No Annual Fee Credit Cards
This type of credit card is really for people which don't
need a credit card. Let us explain this statement. You would
cary this credit card with you and use it only in an emergency
situations when you need to pay for something immediately
but you do not have enough cash.
As this credit card has no annual fee, it cost you nothing
to have one of them and it may come very useful in an emergency
situation. The interest rates for these credit cards are high
and there is no interest free period.
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Now for Credit Cards
Most of credit cards offer up to 55 day interest free period
when purchasing items and services. This means if you repay
the amount spent before the end of the interest free period,
you will not have to pay any interest on your purchases.
This does not apply for cash advances, if you take cash
using your credit card the interest will be calculated straight
away.
