If you have decided to take the plunge and sign up for a credit card, it’s time to start doing the research to find the best one for you. Credit cards are not one size fits all, so take your time to look into a few different options before you select one.
The first step to choosing a credit card that suits you is deciding what’s important to you. Are you getting a credit card to use for everyday purchases, or only for the big stuff? Are you interested in rewards, perks and airline points? Do you travel a lot for work or leisure? Are you only looking to get a credit card to improve your credit score? These are just a few questions you will need to know the answers to before taking the plunge and signing up for a credit card.
Some people will sign up for credit cards purely to reap the rewards. While this may sound like a great idea, be aware that these cards will often come with more fees attached. Weigh up the pros and cons of getting a card with lots of rewards, and only go down that route if you know you will utilise the perks. You will also need to be able to pay your bill on time every month in order to gain access to perks and rewards.
Often, credit card companies will lure you in with the promise of low interest rates, only to hit you with exorbitant fees down the track. Most credit cards will charge you around $100 in fees per year, but some yearly fees can be as high as $700. Be sure to compare not only interest rates, but fees as well when looking at credit card options. Some cards might offer a lower interest rate for the first year, which can be appealing, but make sure you check what the rate will revert to once that ‘honeymoon period’ is over.
Once you have chosen a credit card that is right for you, the next step is setting a credit limit. Your maximum limit should never be anything you cannot afford to pay each month. To work out a sensible credit limit for you, take some time to write out a budget and work out how much you can realistically afford to pay every month.
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