Wednesday 19th of December 2018

How to Choose the Right Credit Card

There was a time when opening a credit card was a simple and straightforward process: you went to a bank, you asked for a card and they gave you one on their terms which were generally the same as the terms for any other card at any other bank that you could go to. In the last thirty years or so, however, bankers began to realize that offering credit, like anything else, can be a competition-based market. At first, the variety offered by the issuers was limited to lower and lower interest rates in order to entice, but that scheme could only go so far before the “profit bottom” was reached, so they began to turn to other incentive practices in order to lure in shoppers.

Apply and Get Free Stuff

The earliest incentives were simple – cash back on the interest that you pay on your card purchases over the course of a year. But waiting a whole year to receive any kind of reward didn’t sit too well with the increasing “instant-gratification” mentality of Americans so the rewards became more inventive: frequent flyer miles, free car rentals, free hotel stays, VIP service, tickets to shows, theme park tickets, free stereos, iPods, concerts and more. All you had to do was apply and get approved in some circumstances, others were application only rewards.

Keeping Your Wits About You

So how do you decide which option is right for you? Well this is one place where you don’t want to just look at the menu and say “yes.” Discretion is very important in choosing which offers you the best advantages because you will have to use the card in most circumstances in order to qualify for the rewards that enticed you to sign up. Using your credit cards normally is fine but if you get one and use it to get the rewards then you are wasting serious money – exactly what the banks want. Choose your card based on hard numbers primarily. There are plenty of products out there that offer the same types of rewards that you are interested in. Find them and then compare their interest rates side-by-side. How much do they charge for cash advances? Is there an introductory rate and how long does it last? What is the fee on balance transfers from other cards? These are the questions you will want to get answers to before making your decision as to which reward and product best suits you.

Above all remember that the primary purpose of a credit card is twofold: One: to make the lender money every single time you make a purchase and two: to make your life somewhat easier rather than having to write checks or pay with cash everywhere you go. Nowhere is it ever mentioned that the purpose of a credit card is to get free stuff. Use your card wisely and only as needed and the free stuff will come in time. You’d be better off saving your cash and buying the “free stuff” than you are in charging your way to it.