In my last article, I talked about the basics of a credit card and how it actually works. In this article, I will provide some tips on credit cards that are needed by one and all to get one.
Why does an individual need a credit card?
There is more than a single reason why a person would choose to obtain a credit card. A person might get a credit card as he might not have the money to pay for the product up front. Maybe (or maybe not) in the grace (credit) period, the person might pay back the credit card company. In the US, people use credit cards to improve their credit rating by taking credit through credit cards and paying them off before the grace period expires. Credit card companies get into a deal with certain gas stations or other companies that there would be a discount on the product if it’s bought on their credit card. In India, most retail markets have deals with credit card companies to provide the credit on a EMI (easy monthly installments) basis. A consumer can buy a product for X rupees and with the deal through the credit card companies, he would be paying X/12 (tenure of credit) for the period specified without any interest on it.
How to choose a credit card?
There are thousands of credit card companies in the market. There are some that are simply the best with low interest rates and longer tenures and there are some others that have deals with some retail chains.
Firstly, the credit card aspirer has to decide why he/she needs a credit card. Is it to improve credit rating or to save on gas or to simply pay off the credit when he/she gets money. Finding the need is the biggest factor in finding a right credit card.
If your credit rating is good (in the US), never ever go for a credit card who charge annual fees unless you are going for a platinum credit card which has a lot of good baggage associated with it. Secondly, find out the interest rate on the credit card before applying for one. If you are some one who drives a lot, choose a credit card that would give you a discount or gives you free gas on certain purchases. With the ever rising price of gas, it’s always a good bet to get a credit card that gives you a discount on it or maybe free gas. The most important aspect for me when I apply for a credit card is the brand on the credit card. I wouldn’t like to go for smaller credit card companies as there have been instances in the credit card’s history that these smaller credit cards introducing annual fees during a credit card tenure. Also, if you are in the US looking to improve your credit rating, do not go for smaller credit card companies as they don’t report the payments done on time. In the US, having plenty of credit cards brings down your credit rating. Choose a couple of good credit cards and stick with it.
