How to Choose the Best Credit Cards
There are lots of different credit cards available for us to choose from and this means that it can be rather confusing knowing which ones to choose. They may seem really similar but it is a good idea to think about the small differences between them because it could make quite a significant difference to you.
The interest rate will vary between the different credit cards. For those people that will not pay their credit card in full this will be really important. Every time you leave an outstanding balance, you will be charged interest and if you can keep this interest as low as possible, it means that you will be paying less as a result. Interest rates will vary between card issuers and they will also change at times because they are variable. Often these changes will be in line with changes made by the Bank of England to the base rate but they may also change at other times as well, so it is a good idea to make sure that you monitor this and make sure that you swap credit card issuers if the rate become too uncompetitive.
Late Repayment Charges
You will also find that the card issuers will vary in how much they charge for late repayment fees. These are charged if you do not pay the minimum balance on time and although many people do not get charged these, it can be worth noting how much they are. This could just act as a deterrent and if you have a direct debit set up to cover the payment, then it should not make a difference anyway as it will be paid automatically. However, you will find that if you do not manage your money very well, even if you have a direct debit set up, you could find that you will be unable to pay it, if there is no money available in your current account to be able to do so. So do make sure, that you are budgeting properly and making sure that you are able to make those payments when they are due.
There are some credit cards which will offer people rewards for using them. These will include things like air miles, vouchers and cash and they can be very tempting. It is worth being very careful with these though. If you are confident that you will always repay the card in full each month and only use it to buy items that you need or really want, then a reward card can be beneficial. However, it can be tricky for people that do not repay the card in full. This is because the interest rate is likely to be higher on these cards as the card issuer will need to make more money in order to pay for the rewards. This means that it could be better not to use these types of cards unless you repay in full each month. You may also find that because there is a reward which will increase if you use the card more, that you can start to use it as an excuse for spending lots of money on the card. This could mean that you will buy lots more items than you can afford and it could lead you to not being able to repay the card in full and then having to pay interest on the card. So, you need to be very careful and think about how you think it might impact your behaviour and whether you are likely to use the rewards as an excuse to spend more or whether you will just take advantage of it as you spend as normal.