How to choose your Creditcard? Useful tips and Guidelines for selecting the best Creditcard that suits all your needs

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By cooljohnny23


How to choose your Creditcard? Guidelines for selecting the best Creditcard that suits all your needs

Having plans to apply for a creditcard but do not know which one to opt for? Don't worry!!! Whereever you are in this world and whichever bank/company you have selected, the below guidelines will help you to select the card that best suits your needs

Today, the creditcard has become an integral part of the common man's life. Since lot of risks and monetary losses are involved with credit card along with the benefits, it's important that you choose the card that suits all your needs. Most banks offer a wide variety of card with different features and benefits, so always go through the entire cart before applying. Also, ensure to check the terms and conditions thoroughly for any hidden charges or fees.

Are you a normal spender? Are you looking for a Low-interest card?

If you are a normal spender who does not want to take advantage of additional credit facilities such as Balance transfers or Cash advances, then better opt for a credit card with a low APR(annual Purchase rate). These cards will generally have an standard interest rate of somewhere between 14% p.a to 19% pa. However, these card won't carry attractive promotional offers like such as special balance transfers/cash advances or Rewards such as Airmiles, Fuel points etc

Most Banks/companies around the world also offer introductory offers on these type of cards. For example, the interest on purchases would be set at 0% for the first 12 months from account opening, which means you will not be charged any interest as long as you make the minimim payment for the first one year. So, if you are contemplating to obtain credit to repay in full at a later stage, then go for these cards

Are you a heavy spender? Want value for money?

If you are a heavy spender, then opt for a card which offers additional offer/incentives like "fuel points", "Airmiles" or "Cashback". These cards will pay back a percentage of your monthly spending back to you as "cash back" or provide you the facility of redeeming the respective points against external services such as Flight points/Air miles, Fuel points, shopping vouchers etc. Since you will be spending a lot, it's a very good way of regaining some of the money that you have spent using your card.

Such cards offering incentives will levy a comparatively higher rate of interest, but the rewards that you receive in return are really worth compared to the additional interest that you pay on these cards. For example, if you have a "Cash back" card offering 3% cash back on purchases each month, the 3% cash return will be higher than the additional amount of interest, which would be around 1.5% per month

Most banks around the world offer Reward cards. These typically offer "Cash back", "Flight miles" or "Fuel points" apart from other offers such as Fuel vouchers, shopping vouchers etc

So, always remember. If you are a very frequent Swiper, always go for a Rewards card. Make the creditcard company repay you

Are you someone who just borrows money? Want a Lower-interest rate Loan?

Are you someone who simply borrows money and circulates funds and doesn't purchase too often or ever, then go for cards which offer Low-interest rates on Balance transfer/Cash advances. If you wish to transfer the outstanding on another creditcard or a Storecard due to the higher interest rate levied by the existing bank, then choose a new card which offers a promotional offer on Balance transfers/Cash advances

These cards will typically offer a lower interest rate on balance transfers/Cash advances, say 0%, 3.9% pa , 4.9% pa, 5.9% pa or 7.9% pa etc for a fixed period, say 9 months or 12 months. These offers are also offered on a long term, generally called as UPIF(until-paid-in-full). These cards will be wonderful if you are planning to convert a high interest rate debt to a low interest debt

For example, If you a card with bank A with a debt balance of $10000. Let's assume the banking is charging you a very high interest rate of 28%pa. To convert this high rate debt into a low rate debt, you could apply for a new card from Bank B offering a promotional offer of 5.8% on balance transfers for 12 months. This way, you can easily consolidate your debts using promotional offer cards

Stay away from Premium cards

Premium cards are Creditcards, basically designed for the high-profile customer or VIPs who spend a lot. Apart from standard benefits such as Balance transfers and Cash advances, these cards offer lot of additional special features such as Priority pass, Airport Lounge booking, hotel Booking, Advance Resort Booking etc. In return, the bank will charge them an additional fee generally called as "Annual fee". If you are a normal customer who does not fit into the VIP profile, please do not apply for these cards. The annual fee on the cards will be almost equivalent to the interest fees for 6 months. The ULTIMA card offered by UK Citibank charges an annual fee as high as £300

So, stay away from Premium Cards if you are not a high-profile customer

General Guidelines to be followed while applying for Credit cards

1. Read and understand the terms and thoroughly. Lot of banks around the world do not mention hidden charges when they make advertisements, but lot of hidden charges may be laid in their terms and conditions

2. Make sure that the Bank approves the credit limit that would suit you. If the credit limit is too less, the card would be of very less use

3. If you have requested for a balance transfer or cash advance on the application, make sure that the company processes the transaction as soon as the card is approved. Otherwise, you may default with your payment at the other bank. This will cause further monetary loss if the other bank penalises you

4. Computer systems employed at most banks would normally process the Balance transfer/cash advance automatically even if the credit limit is lower than what the applicant requested for. In such circumstances, you will have to pay service fee(s) for the balance transfer even if you cancel the balance transfer at a later stage. If the bank is unable to offer the credit limit that you have sought, ensure to cancel the Balance transfer/cash advance that you have requested.

5. Learn the difference between the advertised interest rate and the actual interest rate. Most banks advertise interest rates as "APR"- annual purchase rate. This will be a lower figure, but the actual interest rate will be relatively as internal charges/fees are not factored in when banks calculate APR

6. Reaffirm the interest rate and other charges to ensure that there are no hidden charges. Banks advertising charges-free cards may

introduce new charges at a later stage.

6.If you have been approved for any Reward offers such as Cash back, contact the bank helpline and confirm the terms and conditions associated with the Rewards offers. Most banks will set a maximum spending limit on Reward offers such as Cash back offers. For example, if the monthly maximum limit setup for Cash back is $5000 per month, you will get Cash back only towards the $5000 even if you have spent over $5000. If you have a Cash back offer of 3% and have spent $10000 in a month, you will only get $150 instead of $300

7. Always have addresses and telehone numbers of important agencies such as Credit bureau agencies, Financial Ombudsman etc and the Bank's own Customer response Unit(complaints division) in hand. This will be very useful if you raise any complaints in future


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Lgali profile image

Lgali  says:
11 months ago

nice tips again

cooljohnny23 profile image

cooljohnny23  says:
11 months ago

thanks mate. you are welcome. I am planning to launch more hubs. Sit back and enjoy

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