There are plenty of offers everywhere, be it the mailbox, the retail stores where you shop, the Internet etc. It is a simple procedure to apply for a credit card and get one too. However, one must not go by the card offers, however irresistible they might sound. Instead, while choosing a card, choose one that would be well suited for your needs. By doing so, one could save huge sums of money. There are some critical questions, which one should ask before applying for the credit card.
There are various types of credit cards to choose from. There are regular credit cards, student credit cards, rewards cards, business credit cards, the list goes on. Choosing a credit card is best done based on the utility of the card.
It is important to know that while choosing a credit card, one must be honest with the questions that come with it. For instance, before availing the credit card, one has to be certain if the monthly payments can be made without any delay and if the payment can be made in full without carrying forward any balances.
But if one is looking for a credit card to do balance transfers, then it is better to go for a credit card with the lowest interest rates.
The APR or annual percentage rate on a credit card, is the rate calculated based on the balance carried forward well beyond the grace period. The finance charges will skyrocket if the APR's are higher. The APR charged is different for each usage. For instance, the APR for purchases is different from the APR on balance transfers as well as cash advances.
While applying for balance transfers, it is wise to verify the grace period to clear off the balances before the finance charges are added. The longer the grace period, the better it is for the cardholder as they would have much more time to pay the bill at no extra cost. However, the grace period will not be applicable for new purchases being made on the credit card.
This is the most critical piece, as one must be well aware of the fees and charges. There might be some hidden fees that one might not be aware of. The regular fees would include the annual fee, over limit fee, late fee etc... But credit card companies also adopt various methods to calculate finance charges.