There are numerous benefits to owning and using a credit card. From spreading the cost of large purchases to improving your credit rating and receiving reward points for frequent spending, a vast number of us rely on paying with plastic.
However, when it comes to applying for a credit card, there is a huge amount of information to take in. So you can be forgiven for not understanding what all of the terms, rules and regulations mean.
What’s more, different people will require different things from their credit card, which means there is not one universal solution for everyone. Therefore, take a look at the following credit card tips, tricks and advice to make sure you find the right deal.
Check out the APR
You will frequently see the term ‘APR’ when applying for a credit card. This stands for annual percentage rate and tells you how much your card provider is charging for buying products on credit. This figure includes the actual interest rates as well as monthly or annual fees.
Basically, the higher the APR, the more you will have to pay back over time, as the interest will increase. Therefore the lower the APR, the better.
You should also be on the lookout for representative APR, which indicates the rate most people (at least 51 per cent) are offered. However, if you have a poor credit rating, the APR you’re offered could be higher.
Check the small print in regards to fees
If you make a late payment, have a payment declined or exceed your credit limit, there is a good chance you’ll be charged.
For cards with impressive introductory offers, check to see whether the terms change after a few months. For example, a credit card with special introductory interest rates for balance transfers might still end up charging you for this service.
Think carefully about offers and rewards
With some credit cards, if you pay off your bill in full every month, a percentage of this amount may be returned to you once a year either as a payment or reward. Other cards may offer things like free travel insurance or even a concierge service.
While these sound tempting, think carefully about what you’ll be purchasing and how often you’ll be using your credit card. Are they worth it for the higher APR and extra fees?
Fully understand your finances
In many respects, having a credit card feels like a blank cheque. However, everything you purchase will have to be repaid at some point.
Always aim to pay off more than the minimum amount each month, as this will shorten the time you’re in debt. If possible, pay your balance off in full each month.
If you have a poor credit score, only apply for a card within reach, as any failed applications can damage your rating even further.