Managing your finances is a huge task you need to do. By managing your finances properly, you can avoid burning substantial money on something that is really not useful. Managing your finances can also help you make your financial status more stable. With these, you can make your life better.
When it comes to managing your finances, one of the options is to get a credit card. This option provides a lot of benefits to many individuals. For one, yous do not need bring a huge amount of money in your pocket when shopping. This means that you will also feel safer and more secured against theft. But in order to obtain these benefits, you need to first find the best credit card provider that can cater to your needs. Here are some factors you need to know.
Compare interest rates
There are lots of banking institutions that offer credit cards. Therefore, one way of choosing is to compare their interest rates. Interest rates vary depending on the institution you choose. So, it is vital to carefully assess the interest rates of the banking institution before signing a contract.
Balance your salary and credit card
You also need to make sure that your credit card will match your current salary. Balancing your salary to your credit spending is needed to ensure that you have the capacity to pay for your credit card each month. Luckily, there are reputable banking institutions that offer different types of credit card to accommodate your needs and complement your lifestyle.
Evaluate other fees and charges
Other than interest rates, there are other fees and charges you need to deal with when getting a card. When you want to transfer balances, getting a balance transfer card is ideal since it offers a low introductory rate on balance transfers for a period of time. By knowing other charges and fees, you can make better decisions when to make use of cards.
Know more about reward and freebies
Finally, you also need to determine the rewards and freebies the card company can offer such as VIP lounges at airports all over the world, world-class fitness centres, and free concierge services up to free air miles and cash back privileges.
By knowing these factors before getting a credit card, you can be sure that you can choose the best option that can help you make your lifestyle better and more efficient.
Do you remember the excitement surrounding your first credit card? You probably applied for a credit card when you went to college or maybe your parents offered some advice. Either way, you've had that card since your teens or early 20s and it's probably not the greatest card in your wallet. It might have a high interest rate, no rewards or a lofty annual fee.
Once you starting building good credit you were likely offered better credit cards. Your interest rates are lower, you probably don't have an annual fee or a it's a low fee, and you probably have access to airline miles or cash back rewards. So, why keep the card that is no longer serving you?
How will closing the accounts affect my credit?
The important thing to remember is that when you make the decision to close a credit card account you're reducing your credit utilization rate. Remember that credit utilization accounts for 30 percent of your total score calculation. You'll need reduce your spending habits when you close a credit card account or you're likely to go over the recommended 30 percent utilization rate causing your credit score to take a nose dive.
The average age of your credit accounts is another important factor for your credit score. This is two-fold. If you're newer to credit, it's best to keep old cards open because they remain on your credit for 10 years. That card, though rarely used, is actually helping your credit - especially if you have good payment history. Closing it could hurt your credit far worse than someone who has been building their credit for more than a decade.
So, what can I do?
If you have a high interest rate or a large annual fee, try negotiating with your credit card provider. Sometimes if you tell them you are considering cancelling the card due to high fees, etc, they may work with you. It costs them far more money to acquire a new customer than it would cost them to waive your annual fee or lower your interest rate.
Sometimes you have to close a card. If it's costing you money because the credit card company won't negotiate a waived or lower annual fee, it doesn't make sense to keep it. Your credit might take a hit, but it will recover. You can't however, recover lost funds due to annual fees for a card you don't use.
Closing a credit account should not be taken lightly. Make sure to consider the factors listed above before you close your accounts.