The four Commandments of getting the right Credit Card

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Credit card nightmares are a common occurrence; many miss out on repayment deadlines or go overboard on a spending spree when liquid money is not being spent from their own pockets. But all of that can be conquered. Here is what smart earners can do, to save their sanity from being eaten away by credit card horrors.

Get the right card for the right reason:

Shopping for a credit card is often times like going shopping with your wife or girlfriend, or in other words even a simple small plastic card purchase will require hours of research and informed buying. Often times nagatïve credit card buyers simply look at the credit limit or at most glance at the joining and renewal charges and if they suite him, they get that credit card. But there is a long list of things that one must consider before making that decision.

One must also look at other factors like billing cycle, rate of interest, charges and penalty fees for late payments etc. If you are trying to find a credit card for your business then you must see the supplementary cards that will be available to your employees. Business cards often come with additional handy features like breakup of your spending or analysis of your expenses. These tools are very handy to keep a check on ones spending and also know what sorts of expenses are eating away most of your savings money with the help of automated analytics.

Do not fixate on special offers and cashbacks:

Offers like cashbacks or other attractive provisions are usually created to sign people up for the cards. These may often come in handy but do not fixate on them when getting a card. You must choose a card for a purpose other than offers and cashbacks. Several cards come with additional special features like deals on dining out, petrol charges savings and also on travel. Do not be overwhelmed by freebies and choose wisely whichever works for you.

The primary determining factors for a credit card should always be interest rate along with the charges of fees. Cashbacks and freebies are definitely worthwhile but they should never be the primary determining factor.

Balance transfer can be a good option but…

Often time people spend a little too much on their cards and end up with a long bill against their credit card. So, they transfer this debt to another credit card provided there is ample balance in that card. This is a good way to manage debt at competitive rates. But one must be cautious to not go over-the-top with it. never hit the upper limit of the new credit card when transferring balance. This often affects poorly on your credit score. Also note that some banks announce their interest rates on a monthly basis, so, 4% interest a month actually sums up to 48 percent of interest per annum. Thus, it is imperative to check the rates under a microscope.

Getting too many credit cards:

This is another common mistake of credit card owners where they get too many credit cards. His is a form of unsecure debt and if you get too many you will have a riskier profile as per the financial institutions. Also as this is an instrument to get easy money one may very soon spend a little too much and thus, further push them into a deeper debt trap.

In closing thoughts, credit cards can be a really handy financial tool if managed judiciously but try not to go overboard with it and make regular repayments to keep everything sailing fine.

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