5 beginner’s tips for picking the right credit card
If you’re at a stage where you are looking to apply for your first credit card, this guide is designed to help you understand the basics about credit cards. Understanding the process sufficiently could help you to save money in the future.
What many new customers don’t know is that all credit cards don’t have the same terms and conditions. Different cards will suit different types of customers. Some credit cards come with reward facilities, some are designed for students, some are designed for the super-rich and other cards come with a lower limit on them which means you cannot spend more than you can afford to repay.
In order to choose the right card for you, you’re going to need to do your homework and find out exactly what is on offer. There is no point in applying for a credit card that you are ineligible for, as you will simply be denied upon application. Making multiple applications for credit can, in some cases, tarnish your credit rating.
You also need to have a clear idea on how you plan to use your card. If you think you’ll use your card frequently and repay it in full each month, then a card with rewards (such as cashback or loyalty points) may be right for you. If you don’t expect to pay in full each month then the APR will be more important. Interest rates/APRs vary considerably, so we recommend that you compare different credit cards to see what’s on offer. Remember that there is no rush and it’s better to take your time at this stage and make the right choice for you and your individual circumstances.
Most credit card companies charge fees for exceeding your credit limit or for late payment. When you’ve been a customer for a while (proving you can meet the minimum repayments over a period of consecutive months), you may be offered an increase to your credit limit or you can apply for an increase yourself. Some credit cards also come with annual charges which you’ll be required to pay, even if you don’t actually use it.
Getting hold of your first credit card isn’t always straightforward, particularly as many companies aren’t keen on first time credit card users who don’t have an established credit history. It’s a good idea to carry out detailed research before you start applying, to avoid multiple applications.
If you find yourself being declined, there are many companies who offer what is known as a secured credit card. You will have to pay a deposit up front for this card and if you keep to your agreed limit you’ll be able to upgrade within six to twelve months to full credit card services. This type of card could be worth serious consideration if you are applying for the first time.
So, where is the best place to compare credit cards? Rather than speaking to your bank or building society, which is only likely to promote their own credit cards, you may want to look at one of the comparison websites online to get a general look at what is available to you.