Simplifying Your Search For a New
Credit Card
By
Michael Casamento
Today, selecting
the proper credit card can be a bit confusing to
say the least. There are literally hundreds of offers
from the major institutions eagerly competing for
your business. The easiest way to shop for a
credit card is to break them down into categories.
There are seven major categories that all credit
cards fall into. Each category is listed and
explained below. Once you identify the proper
category, simply narrow down the offers to the ones
that best suite your particular needs and lifestyle.
General
Purpose/Low Interest Credit Cards:
These cards are
great general purpose credit cards for those not
interested in all the special features and costs
associated with CashBack or Rewards cards. They
feature either a low introductory interest rate,
and/or a low fixed rate.
General
purpose credit cards are usually favored by those who
tend to carry a monthly balance on their cards. A
lower interest rate can add up to substantial savings
on finance charges, and be of more value than cards
offering high rewards, or cash back. If you are
planning a large purchase, a low introductory APR may
be just what you need. You can stretch out your
payments over the length of the introductory period,
and save a bundle on finance charges.
Cash
Back/Rebate Credit Cards:
Cash Back
credit cards give you cash or rebate incentives every
time you use the card. The amount given is usually a
percentage of your total purchases excluding interest
and finance charges. Cash back credit cards should be
considered by those who tend to pay off their entire
balance every month, and therefore would not realize
the benefits offered by low interest rate cards. Cash
back cards are always hard to beat, but others may
favor a rewards program offering goods and services
in place of cash. The card you choose will depend
upon your particular needs and lifestyle.
Reward
Credit Cards:
Reward credit
cards give you points every time they are used to
make purchases. The points that you accumulate can
later be redeemed for goods and services. Cards
offering reward points are most attractive to those
who tend not to carry a monthly balance. If you pay
off all or most of your balance each month, a low
interest rate will be of little consequence, making
reward cards the perfect solution for reaping some
extra benefits out of your spending dollars. There
are many cards in this category that give special
rewards as incentives to shop at specific retailers.
Check the terms of each card to find the one that
will best suit your needs.
Airline
Miles/Travel Credit Cards:
If you're an
airline traveler, you should look into credit cards
that offer Frequent Flier miles. You earn Mileage
points as you spend on your credit card. You also
earn mileage points for the miles you fly. If you
took a round trip to Orlando from Washington DC you
would earn 1516 mile points. If you bought the ticket
on your card you would earn even more! Most Frequent
Flier credit cards will give you 5,000-10,000 free
miles as a sign-up bonus, as well as discounts on car
rentals, free hotel upgrades, and many other perks.
Be aware that there may be caps on the amount of
miles you can earn in a year, as well as expiration
dates for unused miles.
Business
Credit Cards:
If you own
a small business then you should consider a business
credit card. With a business credit card, you can
make purchases under your business name, allowing you
to separate your business and personal expenses.
Business cards can in some cases carry a higher limit
than a personal card, and additional cards may be
issued to executives, or employees. Most institutions
offer business cardholders a special categorized
statement that makes it easier to manage your
company's finances and spending habits.
Student
Credit Cards:
Student credit
cards are available to actively enrolled College
students. They are ideal for building a credit
history, and teaching the principles of financial
management. After graduation, the credit history
established with a student credit card can be a great
help when buying that first new car, or even applying
for a mortgage. It pays to start early and establish
yourself as a responsible person by paying your bills
on time. A student credit card usually carries some
restrictions not found on ordinary credit cards. A
co-signer is sometimes required on the account, and
in such cases, permission from the co-signer must be
obtained before the credit line can be increased.
Bad/No
Credit Credit Cards:
If you have
bad credit, or simply no credit history at all, there
are alternatives to help you build/rebuild your
credit. Many institutions offer secured, or pre-paid
credit cards to individuals seeking to build or
rebuild their credit. A secured credit card
requires that you supply the institution with some
type of collateral such as a car, home, boat, or
cash. They will issue you a credit card secured by
the value of this collateral. It functions just like
a regular credit card, except that if you default the
bank can seize the collateral.
Another
solution is a Pre-Paid credit card or
"Debit" card. Pre-Paid cards require
that you deposit funds into the card's account in
advance of making any purchases. When a purchase is
made, the funds are deducted from the account
balance. This is not really considered a credit card
since no credit is actually being granted by the
institution. Debit cards are a great alternative to
carrying cash, and are hence much safer.
____________
About the Author:
Michael Casamento is the
founder of the Credit Card Safari web site, offering
quick and easy comparisons of the latest credit card
offers from top financial institutions. For more
information visit: http://www.creditcardsafari.com
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