How to Choose the Top Credit Cards For Your Needs
How do you choose which credit card is best for you? The answer depends on what you want to use your card for. A buy clone cards gives you a credit (or a loan) for a certain time period before charging you interest. Different card providers charge different amounts of interest depending what you use it for.
Card providers will charge different amounts of interest for each of the above 3 ways you use it. Usually, although not always, the cheapest debt is paid first meaning you get charged interest at the highest rate. You get a new card and transfer £2,000 debt from another card. You then buy something costing £300. You then withdraw £200 from an ATM. At the end of the month your debt will be £2,500. You can’t afford to pay off the full £2,500 at the end of the month but you can pay £200 each month.
However, you are not charged the same rate of interest for each item. Instead you are charged 6% on the transferred debt (i.e. £2,000), 15% on the purchase (i.e. £300) and 20% on the cash withdrawal (i.e. £200). Not always, but usually, the £200 you pay each month will go to clearing the transfer debt first and the cash withdrawal last.
This means you are paying off the debt that is accruing the least interest first and the debt that is accruing the highest interest last. The net result is you pay back significantly more than you would have if you had cleared the highest interest debt first. Hopefully the above shows why you need to establish what you intend using your card for. Once you decide you need to have discipline to stick to using it for that purpose only. If you believe you may need a card for each or are unsure that you will have the discipline required, then it is much better to get separate cards for an individual purpose.
An important point is: please, please, and please again do not use a card for cash withdrawals unless you absolutely and completely have to. Interest rates for cash withdrawals on cards are always very high and interest gets charged from the minute you make the cash withdrawal. Hence, by the time you get your monthly statement you could have accrued weeks of interest on the cash withdrawal.
If you use your card for purchases and always pay the full balance off at the end of each month then you will never pay interest on your card. Therefore, you can ignore the interest rates and look for a card that rewards your spending. Several cards offer reward schemes such as cash back, loyalty points and donations to charity. If you use your credit card but can’t afford to pay the full balance off at the end of each month, then you will pay interest on your outstanding debt, even if you repay the minimum amount.
Therefore, you need to look for a card with a low standard rate (APR). Many cards have a zero interest introductory period which can be good but be careful of these as once the introductory period has ended you will start to get charged interest unless you pay off the full balance. If you have already built up a debt on an existing card then you should maybe look for a balance transfer – see “I have a debt but can’t afford to pay if off in full” below. However, if you are still spending more than you are paying, this strategy is only deferring the problem to a later date.
