People now prefer cashless payments where they don’t want to carry heavy coins in their pockets whenever they go shopping. Credit cards are now accepted everywhere, and they are safer and more convenient options when you go out and buy something from a store or even decide to take a vacation overseas.
However, there are simply a lot of options out there and there are many that are being offered by different financiers. Before you apply, it’s best to make sure that you’re meeting the minimum income requirements, and you should read different tests to see which ones are going to give you the most value.
Different Types of Cards
- Rewards
If you’re after the cashback and the points, then this is going to be the best option for you. Usually, people who frequently travel can convert their rewards into additional air miles and another night of hotel stays. However, there are also popular categories like dining out, gas, groceries, and utility payments that can offer you a lot of points.
Various ways of redemption can be available, and you can use the points to buy merchandise from the issuer’s websites. They are also converted into gift cards and cashbacks as long as you make qualified purchases.
- Cash Backs
Although they sound similar to the rewards card, this is primarily built to give you a return on every penny that you spend. Structures can be different, and others offer flat rates. Bonuses can be given to frequent fliers or those who love to try out new steak restaurants and bistros each week.
The best part is that some don’t charge annual fees at all, and they are generous with their overall schemes. Offers from sites like kredittkortinfo.no can vary but it’s best to test and compare them to see which ones are great for your specific lifestyle. Just make sure that you don’t go overboard with the limit so you can still have manageable debts.
- Travel
Opportunities are abundant if you frequently go abroad for work or leisure. Flexible credits can be geared toward a specific airline of your choice, and you can enjoy perks like priority boarding, premium lounge access, free food, and extra miles if you sign up for them. Hotel loyalty programs and a welcome gift of wines and flowers can also be available so don’t miss out on those.
Annual travel credits and those who love pleasure and comfort can be available as well. Make your next trips more affordable when you triple the points that you can earn when booking at a partner airline. You can also start exploring new restaurants abroad and experience the local cuisines with the help of these types of cards.
- Specifically Geared Towards a Business
Cardholders can separate their personal and company spending with a business card. They are going to earn travel and general rewards with these as well, but you can enjoy a lot of discounts in your industry if the issuers’ network is part of your niche. Know that the limits may be high for these types, but the requirements are pretty stringent. You need to have an income-producing activity to qualify with the financiers and you also need to show stability.
On the other hand, you will get an opportunity to track your spending each month and take advantage of the generous rewards programs that other banks are offering. There are the ones that are best for startups and with unlimited cash-back features so don’t miss out on them as well.
- Student Lines of Credit
Starter packs are available for those who are still pursuing their education and don’t have a credit history. Limits are lower but the requirements are not as strict compared to the traditional types. There are also no annual fees, and you can even enjoy bonuses if you have good grades. For some, this is a good starting point that lets them have healthier financial habits that can make a huge difference later in their lives.
- Secured Types
Unsecured loans will mean that you won’t need to put up a house or a car to get the limit that you need. This is contrary to a secured card where you’re required to make a deposit that will serve as your credit limit. Signing up will mean that you need to deposit an initial $500 limit to receive a revolving credit with the same amount.
It’s the easiest one that many people can be approved for, and they are great when you’re in the process of repairing your financial standing. They are offered by banks and private companies for those who are interested in getting them.
How to Choose One?
People may find it overwhelming to choose a specific type of card that’s going to be a good fit with their lifestyle. However, selecting one will mean that you need to assess your financial habits, needs, and goals. With this said, below are some factors that you should consider before applying.
- Interest Rates
Look for cards with low annual percentage rates, especially if you anticipate carrying a balance. Introductory APR offers can be beneficial for balance transfers or large purchases, but make sure to pay everything before the offer ends.
- Fees
Consider annual costs, late payments, and foreign transaction charges. Determine if the benefits outweigh the costs associated with your account and see if it’s still worth it over the long run.
- Rewards and Perks
Evaluate rewards programs based on your spending habits. Choose between cashback, travel rewards, points, or miles, depending on your preferences, or you can get all of them when needed.
- Credit Limit
Ensure the limit meets your needs without encouraging overspending. Higher ones may improve your current utilization ratios but require responsible management.
- Credit Score Requirements
Understand the score needed to qualify for a particular lending institution. If rebuilding credit, consider secured or starter credit cards with lenient requirements, so you can get the financing that you need and the approval.
- Customer Service
Research the issuer’s reputation for customer service and responsiveness to inquiries or issues. Make sure that they are knowledgeable when it comes to fraud, and you should be able to get answers when you begin to ask specific questions.
Credit Card Terms to Know
- Annual Percentage Rate (APR)
The annualized interest rate is charged on outstanding balances. May vary based on creditworthiness, card type, and market conditions.
- Credit Limit
The maximum amount you can borrow on the card. Determined by the issuer based on factors such as income, credit history, and debt-to-income ratio.
- Minimum Payment
The smallest amount you must pay each month to keep the account in good standing. Typically, a percentage of the outstanding balance or a fixed amount.
- Grace Period
The time between the end of a billing cycle and the due date for payment. During this time, no interest accrues on new purchases if the balance is paid in full by the due date.
- Credit Utilization Ratio
The percentage of available credit currently being used. High utilization ratios can negatively impact credit scores.
- Balance Transfer
Moving debt from one credit card to another, usually to take advantage of lower interest rates. Often incurs a balance transfer fee.
- Cash Advance
Withdrawing cash from the credit card account. Typically comes with high fees and immediate interest charges.
Selecting the Right Lender
Choosing the right lender is as crucial as selecting the right credit card. Consider the following factors when evaluating lenders:
- Reputation
Research the lender’s reputation, including customer reviews, ratings, and industry rankings.
- Customer Service
Assess the quality of customer service, including availability, responsiveness, and dispute resolution processes.
- Interest Rates and Fees
Compare interest rates, annual fees, and other charges across different lenders. Look for transparent fee structures and competitive rates.
- Financial Stability
Evaluate the lender’s financial stability and longevity in the industry. Consider institutions with a track record of responsible lending practices.
- Online and Mobile Capabilities
Assess the lender’s online and mobile banking features, including account management, bill payment, and security measures.
How to Manage Your Credit Cards Effectively?
Managing credit cards effectively is essential for maintaining financial health and maximizing benefits. Follow these tips:
- Create a Budget
Establish a budget to track income, expenses, and discretionary spending. Allocate funds for essential expenses, savings, and debt repayment.
- Pay on Time
Always pay at least the minimum amount due by the due date to avoid late fees and negative credit reporting. Consider setting up automatic payments or reminders to ensure timely payments.
- Monitor Spending
Regularly review credit card statements for accuracy and unauthorized charges. Track spending to stay within budgetary limits and identify areas for improvement.
- Limit Credit Utilization
Keep credit utilization ratios below 30% to maintain good credit scores. Avoid maxing out credit cards, even if the balance is paid in full each month.
- Avoid Cash Advances
Minimize cash advances, as they incur high fees and immediate interest charges. Use cash advances only in emergencies and prioritize paying off the balance promptly.
