In general, credit cards have the same general function: they are a convenient way to pay for goods and services. Among the many credit cards available on the market, how do you know which fits your needs?
In general, three key factors differentiate credit cards:
- Interest rates;
- Fees and additional costs;
- Rewards and benefits.
If you usually carry a balance on your credit card, it might be advantageous for you to opt for a card with low interest rates, even if you have to pay annual fees. Many regular credit cards, including standard cards, gold and platinum, offer options at reduced rates.
To encourage consumers to buy their cards, some credit card issuers sometimes offer low promotional interest rate on newly issued credit cards or balance transfers.
- FEES AND ADDITIONAL COSTS
Some credit cards may include other types of fees and conditions that may increase your costs. For example, if you miss a payment, some credit card issuers may increase your interest rate. The amounts of these fees vary from one credit card to another, so you should carefully consider these additional costs when choosing a credit card.
By law, all federally regulated financial institution must provide information on costs in their application forms for credit card. The information must be clearly stated in an information box at the beginning of the form or in a related document that you receive at the same time. Make sure you understand all the costs that apply to a credit card before completing the application form.
You can avoid paying a large number of these fees by using your credit card carefully. For more information on the charges applicable to credit cards as well as penalty fees, read the publication Understanding credit card charges
If you are used to pay your credit card balance every month, rewards and benefits can then be important factors to consider when choosing a credit card. Before making a decision, make sure to examine the real value of the rewards program and restrictions may apply.
Most people are familiar with the regular credit cards as standard cards, gold and platinum. But there are also special credit cards that meet specific needs.
