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Happygrrls' How-To:
Choose the credit card that's right for you…
Take Charge
Choosing a credit card should be like choosing a mate: you wouldn't just stick anything in your pocket, would you?
Six years ago, when I charged a brand-new car to my Visa, was the last time I saw my name embossed on a credit card [...you are my hero - Chris]. Until now. I'm older and wiser - at least, wise enough to know that, depending on how you use it, a credit card can either be a major convenience or ruin your credit rating for years. Browsing the Internet for tips on how to choose the best credit card to suit my needs (and keep me out of trouble), I learned that, in most cases, it's really just a matter of choosing the right card to suit your lifestyle. Hopefully, the following tips will help you do just that.Determine Your Needs
The most important thing to remember when shopping around for a new credit card is that your spending style should dictate the kind of card you use. Start by asking yourself the following questions (the trick is to answer honestly):Do Your Homework
- Why do you want a card? Is it really for emergencies? Or do you just want to be able to buy that cute pair of jeans you saw at the mall before payday?
- How much do you anticipate charging to your card each month?
- Will you be able to pay off the balance in full and on time every month?
- How often will you use your card when traveling abroad?
- Will special rewards, cash-back or other special offers really benefit you? You should never commit to a card just because you like the free gifts it offers - you may end up paying a higher annual fee or interest rate than you would with another card minus the rewards.
BANK ON IT
Assuming you've been honest - brutally honest - answering the above questions, it's time to check out your options. The dizzying array of credit cards available to consumers today can make this task a bit daunting, but until you get out there and compare interest rates, annual fees, reward options, etc., you shouldn't commit yourself to any one card.Your personal financial institution's website is a good place to start your research. Credit cards are often listed under your bank's Products & Services offerings. Most banks also include a comparison feature along with a list of available cards - use this tool to compare different cards side-by-side.
You can also try filling out a quick survey at www.creditcards.ca; answering yes or no to a few, simple questions will narrow your options down and list the cards that may be a good fit for you by financial institution.
When you've found a card that seems well-suited to your needs, be 100% sure you're clear on all the details before you sign the dotted line. Don't be afraid to ask lots of questions to clear up any doubts you may have - remember, a credit card agreement is a legally binding one and shouldn't be entered into lightly. One small mistake could ruin your credit rating forever. Some questions to ask include:
Squint at the Fine Print
- How is interest calculated? Companies can charge interest in two ways: on the unpaid balance only or on the unpaid balance as well as the current balance. With the latter, if you haven't paid off August's balance and you start charging more items to your card in September, you'll be charged interest on both months' items.
- What is the grace period (the time you have to pay the balance after you receive the statement)? Most credit card companies give you between 19 and 26 days.
- What's the minimum monthly payment?
- Is there an over-the-limit fee?
- If there's an introductory rate on the card, what are the terms? Most introductory rates won't last indefinitely. The important thing to find out is what the conditions will be once the introductory period expires.
Would you sign a contract without reading it over first? Hopefully not. Don't commit to any agreement with a credit card provider without knowing what you're getting yourself into first. If that means getting out the magnifying glass, so be it.Remember, a credit card can be your best friend or your worst enemy. Starting out on the right foot and under the best possible conditions will make it a whole lot easier to stay debt-free and in the clear. ¤ Noa