How to choose right options, applying for a credit card.

By: Michael Huch

Applying for a credit card can be tricky, if you don't know, what options to choose. To assist you, we will try to guide you through that. First of all, you need to realise, what its you goal of getting a credit card? What you gonna use it for? Try to answer this question and based on that, use the following guide.

One of the incentives is weather to choose a fixed rate or a variable rate. A fixed interest rate is very good option. A fixed rated will not change no matter what the economy does. A fixed rate card will help you know from month to month what your APR will be without any surprises. Unfortunately, not many bank offer fixed rate on cards now. But still there are some.

A variable rate can change from month to month. If the economy changes, the rate of your credit card changes. If the bank has to borrow money from the federal government and they are charged a high interest rate that will also affect your APR. This type of rate is less recommended if you can get around it. One thing you have to be careful of is surprise monthly payments. If you go on a spending spree and cannot pay off your credit card bill in full, then the interest rate applies and your monthly payments rise very high.

Another feature that companies are offering now is balance transfer.

This is where you can use one credit card to pay off the other. The only problem with this is that the debt doesn’t go away it is still there just on another card. These incentives are usually offered to new customers and have a limited time they also come with an introductory interest rate offer. Once the introductory period has passed, you are charged interest on the amount you transferred until you pay it off. The only way this option could work well is if you pay off the debt during the introductory period or before the higher interest rate applies to your transfer. Other than that this option is not a good idea. One major disadvantage to transferring from one card to another is now since the debt has been transferred you now have a credit card with all your credit available and this tends to be an invitation for people to go shopping again and charging up the card that was paid off, this creating two cards with debt.

While transferring debt from one card to another, you should pay attention to the “transferring fee". It means that, to take advantage of low introductory rate, like 0% for 6 or 12 months, you will be forced to pay 3% of the transferring amount, but usually not more than 100$. Also, pay attention to annual fee. It can be free for the first year, but then you could end up paying from 20 to 150 dollars a year.

It today's society you need to have a credit card in your wallet. Banks are making them look more exciting by offering things like the option of a fixed and variable rate and balance transfer options. The only way that a creditcard will not be your worse nightmare is if you keep track of your spending and pay them off every month. Otherwise when you transfer money it may seem like a good idea but if you do not pay it off before the introductory time period you most likely will never pay it off. Opting for a variable percentage rate can be good if the economy is in good shape but when it takes a turn for the worse so will your bill. A fixed rate card is the best way to go because you will pay the same every month if you can’t pay it off every month.

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