Credit Cards - Choosing the right card
Today the credit card market has reached almost saturation point in Australia. However this hasn't stopped credit card providers from offering lucrative deals or promotional schemes, neither has it stopped the average Australian consumer from procuring more cards. If you are new to the market, here is a guide to help you compare credit cards and pick the best one for you.
The ultra competitive credit card market has practically reached saturation point. However, it has now stopped credit card issuers offering attractive deals and promotions, nor has it stopped the average consumer from applying for more cards.
If you are new to the market, here is a guide to help you compare credit cards and pick the best one for you.
This should be one of the first things to look out for when shopping for credit cards. Credit card interest rates can be unusually high and if you're not reading the fine print you could be taken for a ride. While many card issuers offer 0% rates they are introductory offers for a limited period only. Hence such credit card interest rates are more of promotional offers. In such cases be sure to read the offer document carefully and ask what the interest rate will be after the promotional period.
The grace period
The grace period is usually the number of extra days the bank gives you after the due date, to pay off your outstanding balances. During this time no interest gets charged to your account. Usually the grace period is from 30 to 55 days. However with the credit card market being so competitive it would do you good to compare credit cards and look for the one with the highest grace period.
Annual fees are more like service charges which banks charge from customers in return for their offerings. These days, however, manyh banks issue credit cards with no annual fees, while some others issue cards which have a zero annual fee only for a specific duration such as for the first year. After that it goes to the regular standard. Be sure to keep a tab on the duration.
In an effort to lure more customers by the day, many financial institutions today issue credit cards which provide cash back, frequent flyer miles and other rewards points. Some may help you accumulate rewards points on purchases made on the card while others may reward you when you use the card to purchase airline tickets etc. Thus when you compare credit cards make sure to scrutinise this feature as you can mostly extract a good deal owing to the competitive industry.
Fixed and variable interest
Other than just the rate of interest on the card, usually you'll also need to check the kind of interest on it. Credit card interest rates usually come in two types - fixed and variable. The fixed one, as the name suggests involves paying a fixed amount every month. However, the variable one can be a little tricky as it fluctuates based on market conditions. So if the market interest rates are low you are one of the lucky few. However if it is on the upside then you will be up for a lump sum payment each month!
Depending on how much you default on your payments, credit card companies will charge a late fee. Be sure to check on this aspect as well when you compare credit cards as a steep late fee can mean having to pay a large amount when you miss the payment!
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ABOUT THE AUTHOR
Article by Richard Greenwood, director of www.click4credit.com.au where you can compare credit cards and apply online