In the modern environment, dealing with individual finance has drastically changed. Plastic money, together with e-wallets, has begun to replace actual currency. Credit cards also play an essential part in monetary activities. From purchasing airline tickets to cinema tickets, paying utility bills to food bills, credit cards play a significant part. They are amongst the most preferred ways of making payments.
Even so, it should be understood that, after having a lot of comforts, these cards come with their fair share of stipulations. Therefore, when using a credit card, one must take precautions. Credit cards can be a privilege and a burden. If you are using them irresponsibly, you might rack up an immense mountain of debt that would be very tough to get rid of in the future.
If you believe you can stop spending too much, question yourself these things first before you commit to getting a credit card.
1. Why are you applying?
When applying for a credit card (or any big buy), the very first thing to ask yourself is why should you do this. Are you attempting to create a credit for yourself, or do you just want a new line of funds so you could go out and purchasing a big flat-screen TV? If this is to pay for anything you can afford, for the wrong reasons, you’re having a credit card. Whichever the situation, make sure that your reasons for applying are in the greatest interest.
2. Do you have the capacity to repay them within the period?
Using a credit card helps you to momentarily spend money that you currently don’t possess. And whilst this may be beneficial in a crisis, it may also make it very easy to spend money that you’re not going to be able to repay. The ideal method to handle your credit card is to view it like it’s your income, and if you have to spend some more, ensure that you pay it back as quickly as you can. Credit cards are not spare funds.
So, make sure you choose one that matches your needs. Choose a lower limit card or student card so that you’re not inclined to go way over the top. If you’re not certain of affording it, use a digital calculator to evaluate how long it would take you to pay back your credit card bill and get out of there.
3. What is your credit score?
Comprehend how credit scores are measured before you plunge in and their impact. Understanding which type of credit, you’re dealing with will make you feel better about the varying rates you’re expected to get, and it will help you measure whether or not a particular deal is worth it.
4. What is your card’s Annual Percentage Rate (APR)?
The next part you need to evaluate after you have done all the initial research on how and why is the APR (annual percentage rate). The average daily rate of interest is your card’s APR. In other words, for any balance not paid in full every month, your APR is the bit of interest you will be asked to pay. Because the APR of your card is linked directly to your credit score, understanding your score will give a better concept about what kind of deals you can get. Be prepared to follow reviews of the specific credit card that you are going to apply for.
5. What is your card’s grace period?
To check the APR of your card, it also is essential to check the time limit of your card. Will your card get one, initially? If that is so, how long has it been? The time between the end of the billing period of your card and the day your bill is generated is called a grace period. One will be able to settle their loans interest-free by paying the contributions in full and during grace per the period!
6. What is your credit limit?
Realizing the credit limit on your card first will allow you to stay far below it. Irrespective of how you intend on using your credit card, it is essential to stick to a safe amount that is below the limit of your card. Since your debt-to-income ratio is a big part of your credit history, make a serious effort to remain within the limits of the credit line.
7. Are you comparing the cards before applying for it?
Also, it is necessary to check for a few other variables, such as hidden charges, reward points options, and whether or not you should participate in online bill pay, to look at the account given of your card. Spect around for the best alternative until you set your goals on a single credit card. It might help you escape a whole world of financial difficulty just by doing a little initial research.
8. Is your card offering any unique benefits?
It is necessary to know what kind of offers you get on your card. Most credit cards give some cash-back reward scheme and perhaps other rewards for monthly activities, such as bonus miles and free tickets. Although these should never be the main criterion for deciding if a specific credit card is one for you or not, must be taken into consideration.
9. Are you planning to make any big-ticket purchases in the next two years?
One will want to get the cheapest interest rate available if they are planning to take a loan to fund a large purchase. To accomplish this, make sure your credit score is as good as it can be. It will cause a difficult request on your credit report to apply for a credit card. This could trigger a few points to fall off your credit history. The decrease can seem marginal however, the cost of your loan will make a huge difference. Once it comes to having the best interest rates on large loans, each bit counts. The smallest interest rate rise will add thousands of dollars to the value of your loan. This is particularly if a huge proportion is borrowed from you.
10. What is the right type of card for you?
All right, maybe you have some space in your budget or enough time to tackle a new debt product, you are very ready for a new card! But such marketing appeals are growing on hard, and there are hundreds of other cards to apply for in your study. So, the crucial question is, which card for your circumstance would be most suitable? Determining the large category of card, you are after will be a pretty good starting point. Like cash back, premium, travel and more