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The groundwork to do before applying for a credit card

Posted on Jun 14, 2011

Updated on Jun 14, 2011

The content is accurate at the time of publication and is subject to change.

Almost every person in the world clamors to find the ever elusive credit card to meet their financial expenses. While some of them indeed use it wisely, a vast majority of the card holders are unaware of the nuances of using the card and end up with credit card debts. The reason for this is not just unrestrained spending, but also lack of proper groundwork to choose the right credit card. Most people feel that it does not matter which credit card you choose, the outcome is going to be the same. However in reality doing good research and having a thorough understanding of a few points will help a great extent.

First of all, you need to understand the reason for applying for a new credit card. Are you looking out to get your first credit card? Or are you looking out for a credit card to transfer your balances? You will have to choose the type of card based on your need. There are many types of credit cards that are available for consumers to choose from. Choosing from that can be a tough task if you are unsure about why you need the card.

You will also need to have clarity on where and how you intend to use the credit card you are applying for. If you are applying for a new card just to enjoy your next vacation, you will surely land up in problems if you don’t have the ability to repay the dues. Use the credit cards only for something that is unavoidable.

Having an understanding of the annual percentage rate and the other fees on the credit cards is also going to be useful. This will help you compare the multiple credit offers that land in your mailbox and choose the card that has the most favorable terms. If a credit card lender is offering very low interest rates, make sure you know the other fees and charges on the card before applying for it.

Make sure you know how the interest is calculated on the card and the grace period available to repay the amount without incurring any interest on the amount used on the card. The grace period is available only until you don’t carry your balances from one month to the other. People who pay off their balances in full each month can expect a grace period during each billing cycle.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products 'Terms & Conditions on the issuing banks' websites.