What is a credit card?
A credit card is a plastic card issued by the banks that allows you to borrow money from the bank. The borrower can spend up to a limit set on this card within a specified period. You usually pay the borrowed amount in one or two installments with interest before getting your next salary cheque. This way, you get a short-term loan without having to queue up at the bank for hours or deal with a broker!
Credit cards are essentially small loans made to you by the credit card issuer. The interest rate on your card is often very high, but it allows you to have access to instant cash when you need it without having to wait for weeks before getting a bank loan.
These days, even online shopping sites offer free shipping if you pay using your credit card.
Why do I need a credit card?
You need a credit card for several reasons. One reason could be that you are currently working in another country. Still, you would like to make online purchases without having to go through the hassle of getting an international debit or credit card. Another reason could be that your bank does not provide home foreign currency loans, and you want to borrow against a fixed deposit. Or maybe you want to buy a pair of jeans in your favorite shop and pay for it in easy installments.
Whatever the reason, credit cards offer you this advantage: they allow you to borrow money without having to go through a lengthy process! However, be warned – lending through credit cards is very expensive and not recommended unless necessary. Before applying for a credit card, check with your bank first. Some banks offer special discounts on standard credit cards if you have an account with them!
What’s the difference between a credit card and a charge card?
A charge card is different from a credit card in that it does not allow you to carry forward your balance. In other words, if you don’t pay fully for something charged on your card, you cannot carry forward the unpaid amount as an outstanding balance and make minimum payments. You have to pay off your entire due balance before you can use your card again.
What is the best credit card to get for a beginner
One of the most confusing things about getting your first credit card can be which one to get. There are so many different options out there, and each one has its benefits and drawbacks. We’ll tell you everything you need to know about choosing a credit card, whether you’re looking for rewards points or cashback, low-interest rates, or no annual fee.
Types of Credit Cards
Before you go out and get a credit card, it’s helpful to know the different types of cards available. There are two main categories: store-issued credit cards and bank-issued ones. Store cards offer exclusive shopping promotions, but they tend to carry higher interest rates. They may also have specific repayment terms, like requiring that you make a minimum payment each month. You could end up spending more than you can afford if you make only the minimum monthly payments. Many store cards don’t let you transfer your balance to another card, which means you won’t be able to take advantage of 0% intro APR offers or other perks.
Bank-issued credit cards are generally more flexible. They often have lower interest rates, better repayment terms, and the ability to transfer your balance if you need it. Some cards even offer rewards programs to incentivize spending, or they may help you build up your credit with a manageable introductory APR period.
How to choose the right card for you
There are hundreds of different credit cards to choose from, but choosing the right one for your needs can help you save money and build up good credit.
Choosing the right card type
The first thing you’ll need to do is decide which type of card you want.
Retail cards: Retail store credit cards offer great rewards and incentives to spend at the issuing retailer’s shops. These can be a good choice if you frequently shop at one store, but they tend to charge high interest rates and fees for late payments.
Bank-issued credit cards: Bank-issued credit cards generally come with lower interest rates and more flexible repayment terms. They also typically have a better rewards program than retail cards, which means they may offer more value for your spending. Before you choose a bank-issued credit card, you’ll need to decide if you’re looking for cash back or travel points.
Choosing the right features
Once you’ve decided on the type of credit card you want, it’s time to choose the features that will help you get the most out of your spending.
One thing to consider is whether you’ll pay interest on your purchases – if so, it can be helpful to look for a card with a low APR. You may also want to prioritize cards that come with perks like travel insurance or purchase protection.
Rewards credit cards offer cash back, travel points, or merchandise for spending on your card. They tend to have higher fees and interest rates than other cards, but they are often the best choice if you don’t carry a balance from month to month.
If you want flexibility with repayment terms, choose a credit card that allows you to make 0% APR introductory payments. These offers are typically for an initial period of six months or longer. Still, they can give you the time you need to pay off your balance without incurring additional interest charges.
Choosing a credit card with no annual fee
Many store-issued cards charge expensive fees for spending on your credit card. For example, cards at warehouse clubs can charge as much as $55 per year for the privilege of carrying their plastic.
If you spend a lot on your credit card each year, those fees can add up quickly and negate any savings you might get from store promotions.
It’s always a good idea to check whether there is an annual fee on a credit card before applying. You can also avoid paying fees by using a no-fee credit card, which is typically easier to get than a store credit card.
Choosing the right issuer
It’s important to remember that not all issuers offer good card options.
Your priority should always be to make sure the card issuer is a member of the major credit reporting agencies. If they’re not, you won’t be able to get a FICO score for your account, and that can limit future opportunities to get new cards or buy things with credit.
Another thing to consider when choosing a card issuer is whether they offer proprietary perks. Some issuers have special cardholder programs with unique benefits or discounts, so it’s worth looking at these features when comparing credit cards.
How to choose your credit line
Once you know all of the available features on a given credit card, it’s time to pick the one that best fits your lifestyle. Most issuers offer customers several different credit limit options to choose from, so choosing the right one is an essential part of getting a good deal on your card.
If you’re someone who likes to use your card for large purchases and pay it off every month, you’ll want to look for a high credit line with low fees. That way, you can maximize your rewards and avoid paying interest on your purchases.
If you’re new to credit or you plan on carrying a balance from month to month, it’s best to start with a low credit line and work your way up.
Conclusion
Choosing the right credit card for your needs can help you save money and build up good credit. It is important to remember that a low annual fee should be one of your top priorities when looking at different cards. The issuer also plays a vital role in selecting the best card, so make sure to research which companies have been around long enough to offer quality service before signing any contracts or making purchases with them. In addition, choosing debit or charge, Visa will give you more purchasing power than a traditional bank account would allow- but only if you can pay off those balances every month! We hope this article has given you some helpful information about choosing the best credit card for your needs.