Credit
cards come in many different varieties. Choosing which one is best for you can
be a mjor headache...
Do you want rewards, money back, miles
on your favorite airline or maybe just a lower interest rate? What about a debit/credit
card that dips right into your bank account which limits what you can spend,
but means interest free shopping?
Finding the right card
can be confusing. How can you figure out what you need. Which are the best offers...
and which are the worst?
Fortunately, there are ways to
cut through the clutter. The Financial Consumer Agency of Canada (FCAC) has a
handy credit
card information section on its Web site. The multi-page, easy to understand,
consumer focused information includes an interactive tool which discusses different
credit cards, asks you questions and then suggests some credit cards that might
"fit the bill".
If you prefer a print copy of this information,
you can order FCAC's publication Credit
Cards and You by calling FCAC, toll-free, at 1-888-461-3222.
While
these tools can help narrow your options, it's important for you to determine
your needs before you choose a card. Also, make sure you read the fine print before
you sign. Make sure you know whether the interest rate is permanent and fixed
or if it will go up. How are the fees determined and can you get customer
service to help if you run into problems?
Here are four
tips that can help you choose the right credit card:
•
KNOW YOUR NEEDS AND WANTS. How much can you afford to put on a credit card?
Will you be able to pay your balance in full each month? Would you benefit from
reward programs? Are you prepared to pay an annual fee?
•
PICK THE CREDIT CARD THAT SUITS YOU BEST. There are different types of
credit cards on the market, with different interest rates and fees (low-rate,
standard, student, retail or charge cards).
• SHOP AROUND.
Don't take the first card offered to you. There may be a better card for you,
one that will fit your financial habits and needs.
• UNDERSTAND
ALL THE TERMS AND CONDITIONS. Before you make your final choice, make sure
you understand all the terms and conditions of using the card, including the interest
rate and what fees are charged. Don't hesitate to ask questions about anything
you don't understand.
Credit cards do seem to be a necessary
evil in this modern economy, but do your best to pay all bills on a monthly basis.
Always pay more than the minimum... even if it's only a dollar or two more. Besides
lowering your balance quicker, this improves your credit score. Look at the Credit
Union option. These cards often have lower spending limits, but also offer better
service and lower interest.
The last word? Banks and credit card companies
are in business to earn money... from you. Only you can protect yourself from
getting in over your head.