How to Choose the Best Credit Card for Your Financial Needs?
It is essential to know how to use a credit card to avoid unpleasant surprises. It is vital to select the best one within our reach, based on our personal and economic characteristics. For specific family situations or customer profiles, the best credit card for studentsis the one that is not on loan.
Today, we will analyze how to compare credit cards, based on the tools and information we offer in money management skills.
How to choose the best credit card?
Here, we offer seven tips for choosing the best credit card for students. Before selecting any, you have to think with a cool head if there are real needs, present, or future that justify the acquisition of a particular credit card. You have to verify what are its characteristics and conditions to avoid unpleasant surprises.
- Check the APR
It is an annual indicator that includes interest, expenses, and commissions, which is usually between 18% and 20%. Such payments can be made at the end of each month or with flexible monthly installments agreed with the bank. The APR must be checked to see if a card is convenient.
We should not look at the monthly rate, which often highlights us in advertising. “Pay 1 or 2% per month” means, in reality, “pay 12 or 24% per year”. The lower the APR (Annual Equivalent Rate), the better the card is in this section. Keep in mind that some cards may offer different interest rates depending on the credit to buy, or we have taken out liquid money. For example, at the time of writing these lines, the Visa charges a 21.84% APR for term purchases. However, a different and higher interest rate applies if what we do is a provision of cash on credit, a 26.82% APR.
- Credit limit
A credit card with a high limit is very tempting, but it can be a double-edged sword. It is best to weigh the advantages and disadvantages of each credit limit according to the purchase needs and actual payment capabilities, according to the bank’s conditions.
- Payment times
Some cards offer extended payment terms, but you should keep in mind that they are usually the ones that penalize the most if you exceed the period to pay.
- Acceptance Level
Certain brands of cards such as MasterCard, Visa, American Express, etc., are usually accepted in more commercial establishments than others. So you have to make sure that it is a card that is allowed in most of them.
- Free cards
There are free credit cards; that is, you do not have to pay commissions for issuance, renewal, or for obtaining an additional one. Even these free credit cards allow you to withdraw cash at ATMs without paying commissions. These types of cards are very attractive, so make sure you don’t fall into the trap when it comes to borrowing quickly.
- Associated discounts
Some credit cards have agreements with certain stores, which offer refunds for the purchase of products using these cards. But it is necessary to compare the prices of these products because it usually happens that their prices are too high so that their supposed discounts are not so beneficial. Even many of these cards charge commissions so high that it is not worth accessing such discounts per purchase.
- Purchase insurance
Some credit cards offer insurance for the purchase of a particular product or service. For example, some credit cards offer travel insurance policies if you buy an airline ticket with them, which includes compensation in case of lost luggage and even life insurance.
Can we choose a card?
The question that, at first glance, may seem to make little sense. After all, we need to be unable to choose the financing product that interests us. However, there are a few realities that limit the free choice of the client:
- Our economic situation, since each financial institution, studies the risk of granting us the available credit of a card. The bank assumes threat and, of course, explores the ability to return the money we can use.
- Before choosing a card, the bank with which we want to work must be decided, since in most traditional cards it is necessary.
- Emergency credit, the commission factor, is as or more important than the cost of interest.
- Hire an associated checking account in which the repayment installments are paid. That is why, in this type of payment method, you have to compare banks before your cards.
Based on those mentioned above, comparing credit cards makes full sense in the case of those that do not require a bank change. Since in these cases, we can decide for one or the other without having to sign up for an account.
After analyzing these tips, you already have a clearer idea of how to choose the most convenient credit card. For more information, read our Money Management blogs.