Posted by Allison on 4 April 2009, 10:01
People decide to choose a new credit card for lots of different reasons. Some people want to apply for their very first one; some want to consolidate existing debt onto a new low or no interest card, and others want to take advantage of some perk that is offered with a particular card.
Whatever the reason may be for making your choice, it's important to do your homework first.
One of the best places to conduct your search is via the internet, but different countries have different cards on offer, so it's important to select only those search results which are relevant to your particular country – otherwise you will end up looking at credit cards which are based on a different currency to your own. Different countries also sometimes have different sets of rules regarding payments and how credit cards are run, so it's essential to make sure you are only considering ones in your own currency.
The first thing to do before you begin your search is to work out what you need the card for. As you'll find out, there are a lot of credit cards available and in order to find the best one for your particular situation you need to refine your search right from the start. If you don't you'll soon find you are trawling through hundreds of results for all kinds of cards including ones that aren't aimed at you.
By setting out on your search with a firm goal in mind you'll find it much easier to find what you need. The question is, how do you start?
One of the main questions to begin with is do you have any existing cards? If you do you should think about what rate of interest you are paying on them. Are you looking to pay less each month in order to pay them off more easily? If you are then it's essential to look for a card which will have a low interest rate – or none at all.
This is a good point worth considering since while an interest free deal sounds good, it can sometimes work out more expensive in the long term than getting a card on a permanently low rate. For example, an interest free credit card is usually only interest free for a specific length of time. This could be anywhere from six months to around a year. After that period expires you could be paying 19% or more in interest.
On the other hand you can get low interest deals which apply to the balance you transfer onto that card for as long as it takes you to clear it. Some of these deals offer rates as low as 2% or 3%. If you think it is going to take you ages to clear your balance this could actually be a better choice – especially if you have a lot of credit cards already and you are likely to find it difficult to get another one at the end of the interest free period.
One thing to bear in mind is that it's not always as easy to bounce a credit card balance between cards at the end of that interest free period either. A lot of the credit cards in Britain are managed by just a few umbrella companies, and you cannot bounce a balance between cards owned by the same company. So it might not be as easy to transfer it to another interest free card as you think. There is also the question of paying a transfer fee each and every time you move it, which means you could end up racking up a lot of charges. So think carefully before doing this.
If you don't have any credit card debt and you want a card simply to make purchases on, then the interest rate won't matter to you that much – so long as you are intending to pay everything off before your due date each month. Some credit cards come with a lot of advantages in this sense, such as bonuses for spending money on your card. The type of bonuses on offer will vary between cards, but they can include getting points for everything you spend, which can then be spent or exchanged in other shops or for goods offered by the credit card company themselves.
Some people want to have a credit card just for emergencies, and in this case it won't really matter which one you get, since you will (hopefully) rarely be using it. The one aspect to bear in mind here is whether you are ever likely to use it abroad. If you think you will – perhaps on an annual holiday – then make sure you choose a card that won't charge you a fortune for buying items and services in foreign currencies.
As you can see there is a lot to think about when considering which credit card to apply for, which is why it's important not to rush into any decision. With that said, be prepared to move fast on a good deal if you find one, since many companies will change what they are offering from time to time. All the adverts you see for various offers should have an expiry date on them so make a note of the relevant dates on any offers you like and keep looking for as long as you have.
It's good to make sure you have a spare couple of hours to search for your next credit card, since it can take a while once you start following up information you find on the internet. Write down the options you like as well, and then narrow down your shortlist to the one you want to opt for.
Shopping for a credit card can be a long process, but it's worth putting in some effort to ensure you don't end up picking the wrong card that doesn't serve your needs. If you do that you could be stuck with it for a long time.