How to Choose the Best Credit Card (Part 1)

How to Choose the Best Credit Card (Part 1)


But in reality, there are many variants of credit cards, and it may be worth exploring the right options to fit one’s needs. Yes you read it right – there are different types of credit cards aimed at different types of customers. Read on, and you will understand which card should you switch to next:

1. No fee card

If you are looking for the most basic credit card, with minimal fees, just to help you with your expenses until your next pay check arrives, then this is a good option. Unlike most credit cards, a no fee card has no annual fee or joining fee. However, banks need to make money out of the cards.

So, the flipside is these cards come with high interest rates in case you default (that is, not pay back your credit card bill within the given time period, normally 30 – 40 days from the date of issue of your monthly card statement).

These rates may vary around 20% and depends on the institution and the market you are operating. If you think you can manage your expenses and pay your bills in time and do not wish to pay an annual fee, this is the card for you.

2. Low fee card

Similar to the no fee card, a low fee card charges a bare minimum annual fee in return for a few privileges or shopping benefits to incentivize customers. Once again, interest rates in case of customer default is high – so steer clear if you think your expenses are mounting and you cannot repay in time

3. Low rate card

The third category, as the name suggests, charges lower rates (normally 5% – 10% lower) than the no fee card rates. If you feel you cannot manage your expenses, may default from time to time and desperately need a line of credit, then this is a better option than any other credit card.

Also, if you are transferring your credit card balance to a new card, this is the best option as the rates charged are the lowest among all credit card types. Just to take an example, if you owe $100 and have defaulted, then you may have to shell out $20 for a low fee card whereas a low rate card may charge you $10 – $15, thus helping you save $5 for every $100 of your card balance. If you struggling with your expenses, every penny counts!

Stay tuned for Part 2 coming soon!

Consumer Tips reference:

card purchasing management

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Categories: Credit Cards