Choosing a Card

[Alvin]

Hi guys and gals! A lot of credit card companies have been giving me brochures about their products. How do I know which one to choose?

[Rose T]

For me, it depends on how you plan to pay the balance incurred each month. If you're the type who pays the full balance, then I suggest you get a charge card. For my part, I only pay the minimum amount required if the balance is too big. So I chose a card that gave me a low monthly interest rate.

[Louis]

Good points Rose. Let me add that the grace period should also be included. A grace period is the time that the credit card company gives you to pay your balance in full before they add a finance charge. The period is usually counted starting from the billing date. So if you received your bill on the first of the month and it says your period is "30 days from the billing date," then you should pay by the end of the month. Some credit card companies also put the actual date which is helpful.

Its obvious that you should a card that gives you a longer grace period. This way, you have more than enough time to pay your balance before incurring additional costs.
________

[Mark Russel]

A longer grace period is a good choice. However, this should not mean that you buy more than you can pay. Even with a long grace period, you must always pay your balance in full.

[Margaret]

However, this should not mean that you buy more than you can pay.

If you can actually do this, then there would be no need for a credit card right?

[Carmel]

If you can actually do this, then there would be no need for a credit card right?

Good point.

[Carmel]

Just to contribute something to the discussion, when buying a credit card, you should also know the different fees and the situations in which the fees apply.

For your average card, there is an annual fee which works like a membership fee. You pay this every year regardless of how often you use your card. There is also a late fee which is applied when you are unable to pay the minimum when it comes due.

I would have included over-the-limit fee but most companies nowadays won't allow you to buy anything if your card is already maxed out.

[Chuck]

Hi guys and gals! A lot of credit card companies have been giving me brochures about their products. How do I know which one to choose?

You may want to read my post in a different thread. See for yourself here.

[Allison]

I have a question. Is there really a credit card that carries 0% interest rate?

[Baby Jane]

You also need to ask how the finance charge is computed. Some companies practice what is known as double billing. Here's how it works.

Let's assume you have a balance of £500 with an annual percentage rate of 11.9%. If you pay just £200 at the end of the period, then you would have a finance charge of around £4.08. Double billing computes it differently. Say your the balance on your previous month was £1000. Add that with your current balance and then averaging would give you £750. Which means your finance charge is now about £6.11.