What To Look For in a Credit Card
Credit cards are powerful tools that can be used for many financial purposes.
When looking for the right credit card that will best suit your spending habits and lifestyle, there are considerations you need to ponder on to make sure that you’ll be able to maximize the power of your credit card.
What are the factors you need to consider when shopping for a credit card?
Here are just some of the things you need to watch out before deciding to apply for a credit card.
1. Interest rate
Imposed by banks on all financial services they offer, interest rate is the percentage of the amount you borrowed which will be added to your total balance. When looking for the best card for your lifestyle, always gun for banks that offer credit card with lowest interest rate.
While most credit cards on the market offer interest rates between 3 and 3.5 percent, there are a few credit cards that provide rates that can go as low as 2.5 percent. However, most credit cards with lower-than-average interest rates require higher annual pay and have more expensive annual fees. If you are willing to get a credit card with much lower rate, make sure that you are eligible and ready to shoulder the annual fee.
2. Credit limit
Credit limit, which is the maximum loanable amount imposed by the credit card issuer, should also play a big factor when looking for a credit card. For first-time borrowers, expect your credit card issuer to be a bit stingy when it comes to credit limit, since you still have to start building your credit and earn your reputation as a trustworthy credit card user.
While having a low credit limit can effectively cover your spending, there are drawbacks when banks impose you a relatively low credit limit. A smaller credit limit can mean having a higher chance of maxing out your credit card. Aside from having a negative impact on your credit score, going beyond your credit limit can also mean fees imposed by your card issuer.
3. Credit card fees and penalties
Credit card issuers do not come short with the list of fees they can bill from cardholders. To avoid getting sucked up on tremendous fees that can rack up your monthly budget, you need to understand all the fees and penalty charges that can be imposed by banks.
Some of the most common fees include the following: credit card annual fee, over-the-limit fee, balance transfer fee, supplementary card fee, and others. Make sure to know all the fees and penalties that can be obliged to you to avoid skyrocketing bills by the end of the month.
4. Perks and bonuses
To attract cardholders into swiping more, card issuers offer some of the best credit cards deals to all cardholders, with perks differing on the type of card issued. Most of the common perks include cash rebates, discounts at partner merchants, gas points, air miles, and others.
So are you prepared to get your first card already? You might want to check our guide on how to apply for a credit card in the Philippines.