Credit cards are a great financial tool that can enable you to avail of significant savings and special offers on your next purchase. Want to find out how you can make the most out of credit cards? Read on for some credit card must-knows:
There are a bunch of different types of cards to choose from.
There are several sorts of credit cards: general-purpose cards are often used anywhere, while private label retail cards can typically only be used at the issuing store or station.
There’s no perfect number of credit cards.
There is no limit on the number of credit cards one “should” hold. While in most cases, one to three general-purpose cards suit most consumers’ requirements, if you want a retail card make sure to get one for the stores you visit the most.
You must understand your card’s interest rates.
Credit card interest rates can vary — from 0 percent, limited-time balance transfer offers, to as high as 30 percent. To determine your credit card interest rates, creditors use multiple factors such as your credit score, income, assets, etc.
Comparing cards
Banks, credit unions, retailers, and MasterCard companies all issue credit cards. The best way to apply is to shortlist and find the right option for you by researching the best rates and terms online.
The contract is binding.
Always make sure to read all the fine print of your agreement carefully before signing it as once you’ve done so it is a legally binding document. Additionally, make sure to double-check the following terms in the contract:
- Credit line/limit – The maximum amount you can charge on the credit card, including interest and costs.
- Annual percentage rate (APR) – The amount of interest that is charged on your carried-over balances.
- Interest calculation method – This is a more common method of calculating interest charges and involves averaging the daily account balance, then multiplying that figure by the periodic rate.
- Fixed or variable APR – Fixed-rate APRs have fixed interest rates while variable APRs are linked to an index and can differ.
- Fees – Standard fees include fees for cash advances, balance transfers, paying late, exceeding your credit limit, and sometimes an annual fee. Try to avoid cards with nonstandard fees, such as application charges, online account management, and account termination charges.
