Many people put more effort into ordering from a fast food menu than they do choosing their primary credit card. Since a credit card can often turn into the fast lane to debt or excessive overspending, it’s vital that you have a checklist of measures to use in making the right choice.
Maintaining good credit can have great bearing on some of our most important desires, such as buying a home, buying a car, starting a business, and getting lower interest.
There are a number of important personal habits and considerations that should be used when finding a card to best serve your needs. The following is your fail safe method to finding the right credit card for your personal needs.
First, check your credit score. A free copy of your credit score can be accessed at Equifax, Experian or TransUnion, the three major reporting agencies. Because the best cards require very good credit, knowing your score in advance will help define your field of selection.
With credit score in hand, it’s time to consider spending habits. Basic questions to answer are will you pay the full card balance each month or carry a balance? Will this card be used for most household purchases, all large ticket items or only for emergencies?
Annualized percentage rate is the crux to how much you ultimately pay for stuff bought using a card and often is the depth gauge to overall debt level. Cards come with either fixed or variable interest rates, and each has advantages. Preferably, start by choosing a card that offers 0% interest rate for the first 12 months.
Fixed rate cards are just that with the annual percentage rate set at a fixed level. National averages on fixed APR cards range from 16.54% upward to 22.03%. However, credit card companies have the right to increase fixed interest rates at any time per the card agreement.
Variable rate cards have interest rates often stated as an index plus margin. For example, the actual rate charged might be „index + 11.99%“. If the current prime rate index is 4%, the card APR will equal 15.99%. For most people, tying the interest rate to Federal Reserve decisions can be tricky, but it can also be advantageous depending upon how the card is used.
Another important factor in credit card choice is the credit limit, or how much you can charge before reaching the cap. You want a limit that is high enough so you’re not always close to the maximum, especially if you intend to carry a balance. Carrying a balance at the max or charging close the limit cap can have a negative effect on your credit score.
Also, review the card issuers method of computing interest charges. Generally, the average daily balance method is used. The monthly rate is computed by adding all daily balances together and dividing by the number of days in the billing cycle. Using this method, the more days in the cycle will give a lower interest charge. For example:
- If average daily balance is $225.00 and billing cycle is 25 days, interest charged is 225/25 = 9%.
- If average daily balance is $225.00 and billing cycle is 30 days, interest charge is 225/30 = 7.5%.
Equally import with interest rate calculation is to know the fees and penalties that can be tacked on to your monthly payment. Transaction fees for transferring a balance from another credit card are common, as are fees charges applied when you pull a cash advance from an ATM using your credit card. Here are common fees to give thought to:
- annual fee you pay annually for the privilege of using a credit card
- balance transfer fee is usually between 3% and 4% of amount transferred
- cash advance fee between 2% and 5%
- foreign transaction fee is a charge of 3-4% â€‹
Also, be particularly sensitive to late payment fees. While our intentions are to always make the monthly payment on time, it doesn’t always work out that way. Penalties for missing the payment due day can run from $35.00 to $50.00.
Finally, list the incentives you want a card to offer. Do you need a rewards card paying bonus points every time you make a purchase? If so, will the point accruals be used for travel, merchandise, cash back, or a combination of these? Do you need a card that is geared toward business use or just for everyday purchases? Do you simply need a low interest rate card?€‹
The bottom line is to find a card that will most closely cover you personal spending habits. All of these checkpoints can be covered in short order. Begin by listing your personal needs, highlight your must have requirements, and use the internet to review cards meeting your criteria.
College can be a time of learning, a time of adventure, and a time of stress. Many of those stresses spring from bills. From student loans to textbooks, college life is expensive. Many students sign up for student credit cards during college.
Student credit cards are granted to any member of the academic community regardless of whether a student is part time or full time, undergraduate or graduate, international students who are visiting, working or studying in the US, school staffs either full time or part time faculty and administrators who are ages 16 year old and above. For those students who are less than 18 years of age consent from the parents or the guardian is required.
Applying for a student credit card is advised since it can help students in creating their credit history which they will need in the future especially in obtaining loans including car, housing or even cash loans. A great number of international students and scholars find it really difficult to obtain a credit card since they lack a credit card history. In order for them to build a credit card history they should have a credit card or at least have a history in paying off debts of whatever type. It is actually a frustrating situation especially if you are badly in need of financial assistance. Many international students who applied for a credit card have been rejected.
How can I obtain a student credit card?
Before applying for your credit card, keep in mind that this should not be a free pass to buy anything you want. Make sure you will be able to make your monthly payments!
1. It always better to obtain a secured credit card to help you in building your credit history. Inquire in your bank whether they are offering secured credit card. A secured credit card is a type of credit card with a deposit. The deposit becomes your credit line. This means that when you reach your credit line you need to pay off or else your credit card is going to be suspended. If you can religiously pay your monthly credit bills then you will be able to build a more reliable credit history.
2. Student credit cards are open to students who have lived in the United States before or for some time so an international student will still have the chance to obtain credit card.
3. For full time student you may contact your bank in order to apply for a student credit card. Your bank will handle your credit card request.
4. There are cases when your application for a student credit card is denied; when this happens you need to find someone who has a good credit standing to act as your guarantor.
Benefits derived from obtaining a student credit card:
Student credit cards help students to learn how to become responsible, especially in terms of handling money. By wisely using these cards students are able to start boosting their credit scores. A student credit card is also a great way of teaching students about interest and debt. With correct and proper guidance, students will be able to gain more benefits from obtaining a student credit card.
The disadvantages of student credit cards:
A student credit card when not used responsibly can result to a great amount of debt that follows a student even after he or she graduated from college. The reason for this is that often times students max out their cards especially those without any money managing skills have the trouble understanding that a credit card is not "FREE MONEY". It is a debt that needs to be repaid.
Sometimes students have very little income which makes it difficult to pay on these credit card bills. Each month, the bill continues to rise and become more overwhelming. Often, late payments and interest begins to accumulate, making it harder for students to repay the debt. The minimum payment just isn't enough to put a dent in the problem.
In signing up for a student credit card remember that you and you alone are responsible for paying your bills so be responsible in your expenses. Control yourself from overspending on things that you don't need.