Top Ten Tips For Getting The Right Credit Card

Dodging through the Maze and Getting The Best Deal Going

Purchasing any financial product can be a difficult matter. The marketplace is one fraught with complications and offers are thrown your way from all directions. Sometimes it can all seem overwhelming. Who do you buy from? Who do you believe? What is the right deal for YOU?

To simplify matters, and make it easier for you to get the best deal possible, we’ve compiled our top ten tips for getting the right credit card.

1) The first and most important thing to understand before you consider any financial product, particularly a credit card, is this: You must have income sufficient to pay your current bills and overheads PLUS at the very least your credit card minimums payment each and every month. Ideally you should aim to pay back as much of your balance as possible month on month. Ensure that you do, and the ball’s rolling…

2) Consider just how much you can afford to borrow. Credit card companies operate by pumping up your credit limit until it reaches the stage where you’re so ensnared by the lure of cheap finance that you have followed the balance right up to the top. When this happens consumers can only pay back the minimum balance – around 2.5 per cent of the overall balance – each month. Given the high interest rates involved, this can mean paying back as little as just one of a percent off the balance each month. It doesn’t take a math genius to figure out the problems that this can cause. Operate a maximum balance rule and abide by it. If you’re unsure of whether you’re disciplined enough to follow it, get the credit card company to lower you limit accordingly. If you’re sure that you can afford a credit card in the first place, and follow no other rule – then follow this one!

3) Boost your credit rating as much as possible before actually applying for a credit card. The better your credit rating, the lower your interest repayments and the less money that will end up in the hands of the lender. You can do this in a variety of easy ways in the months before you apply for your credit card. Paying your bills in a timely manner; closing unused retail store cards, credit cards and old bank accounts with overdraft facilities all help. Likewise if you have maintained a healthy and long-standing arrangement with a bank or other lender. Don’t apply for a stack of credit cards, loans and so on, unless you’re absolutely sure it’s the right product for you. It goes without saying that you should never apply for a credit line unless you use it.

4) If you have or have had credit rating problems, it’s definitely worth applying to a credit reference agency, like Experian, and checking it out. As with all companies errors unfortunately happen all the time. Erroneous reports of missed payments, referrals to debt collectors and even bankruptcies can scupper your chances of getting a low rate of interest and even a credit card altogether. It’s vital that you get rid of black marks on your credit rating. Query everything and haggle with credit reference agencies so that only the information that is listed on your credit history that should be there, is there.

5) Transferring the balance of your credit card to another one is a way of paying off your existing debt at a cheaper rate. In many cases this can be set at 0 per cent for a period of a number of months, before reverting to a higher rate. By switching to such a card – and then another at the end of the interest free term, and maybe even another after that – it gives you a clear run at reducing your debt, without it spiraling ever further upwards. Even if you’re still only paying 2.5 per cent off the balance a month, far better to do that than knocking off one half of a per cent, or less.

6) If you have no debt obligations, are patient and diligent, and want to get one over the credit companies while making a tidy profit yourself, keep reading. Scan the market for credit cards offering ‘Super Balance Transfers’ – where you can transfer money into your bank account at 0% for a fixed time – and take one out. Max it out and transfer it into a high interest bank account. Don’t touch it. Now, ensure you make the minimum payment each month and pay the balance off at the end with the money you’ve banked. When all that’s done, you should be pleasantly surprised with the nest egg of interest left over in your savings account.

7) If a bad credit card is all that’s available to you, it is best that you use it as little as possible and pay off the balance in full at the end of every month. Don’t use it for big purchases as interest is likely to be high. By proving that you are a responsible lender with a high interest credit card, your credit rating will go up and cards with lower APRs will be made available to you in the fullness of time.

8) Consumers who spend on a card, but don’t clear the debt each month should focus on minimizing the interest cost. Search the market for the lowest purchase rate available, but also keep in mind the day when you’ll clear the balance in full (e.g. bonus time; when your bonds mature, etc.) and don’t let the balance spiral beyond your means.

9) If you pay off your balance in full each month then the interest rate is irrelevant. Focus instead on the gains available from using the card for spending. The key to this is the reward scheme offered. Many credit cards offer points schemes or even cash-back. There’s a huge array of different schemes, but by picking the right one you can benefit substantially. It’s often simpler just to go for a Cashback card, where the benefits are more apparent, but sometimes reward schemes offer great inducements – particularly when they offer double points to new customers, and so on.

10) The minute you think you might have a credit card debt problem, do something to redress it. Help and advice is always at hand and things are usually less bad than they first seem.