Making The Right Choice: Picking A Credit Card

By: Peter Kenny

We've all received those ubiquitous credit card offers in the mail haven't we? The fact is that hundreds of thousands of these "pre-approved" credit card offers are sent out by various credit card companies each year. The goal is to snag as many potential credit cardholders as possible. As the prospective cardholder, you must wade through all of these different offers and make a decision about which credit card will be the most beneficial for you. In order to do that, you need to know not only what your reasons for getting a credit card are but also what sorts of features are available.

Essentially, a credit card is a form of borrowing that includes a regular interest rate that is figured as part of the monthly payback for making use of the extended credit. There are a few different approaches to the use of these cards that most people take. Some people keep a credit card only for emergency purchases or with the idea that the amount will be paid back regularly and in full. Others make extensive use of the card and may end up paying balances over time. These types of people will be apt to set up automatic billing arrangements using their card for monthly budget items. There is often an amount of overlap that happens between the types of features that a card carries and the planned uses for the card.

So, the most important thing to decide is whether you are going to make occasional or regular use of the card. Knowing this will help you determine features like credit limit, the type APR (annual percentage rate), finance charges, different types of fees, as well as extra features like cash advances, frequent flyer miles, forms of travel and rental insurance, and rebates, to name a few.

Of course, most of these features will be attached to the type of card you choose. There are three different credit card types that are offered by most credit card companies. Each one has its own assortment of features, advantages, limitations, and price ranges. There are security cards, which require a certain level of security deposit in order to use. These are typically offered to new credit card users who have not had opportunity to develop their credit yet. Most of the time, the credit limits are kept very low or they are variable based upon the amount of the security deposit paid by the customer. Next, there are regular cards.

With these cards, you do not need to pay a security deposit. Most regular cards have very few features included. The regular card is a middle-of-the-road card meaning that the credit limits are generally higher than security cards but are not as high as those in the next category are. The premium card, which includes levels like gold, platinum, and titanium, is the top-level card with the highest interest rates and the most features available for users.

Needless to say, finding the right credit card requires that you do your homework and simply know what it is you want and what will be beneficial for your purposes. If you have that figured out, you won't be apt to take the first card offer that you receive in the mail.

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