It can be extremely difficult choosing the right credit card, what with there being so many competitors out there trying to gain your custom. Here are the answers to some frequently asked questions about credit cards.
Are zero per cent balance transfers better than low APR cards?
Not necessarily. Zero per cent transfers start with no interest to entice you and can be great in the short term to curb the amount of interest you are paying and consequently help you to get your finances in order.
You will usually find, however, that the deal only lasts for about six months, before the standard rate of interest kicks in again. Low APR cards, in the long term, can prove to be less costly in terms of overall interest.
That is why it is crucial to understand the small print and do the maths to see how the interest payments will affect you, in actual terms, over a longer period. So, in short, the low APR option regularly works out better in the long term.
What are the other benefits of a low APR card?
With these cards you can get a really good deal in the long term and stay ahead of the interest payments. Switching credit cards on a regular basis can also be detrimental to your credit rating. You also have the potential burden of fees on the balance transfer if you keep changing your card.
It is worth pointing out that if you are the sort of person that pays off most of your credit card balance each month, rather than just the interest, a low APR card is particularly beneficial for you. A zero per cent interest card is a better quick fix for those who are simply meeting the minimum payment each month.
Are store cards beneficial?
Store cards can only be used within the group of shops that the company owns whereas credit cards can be used everywhere, so it does limit you to an extent. The main bonus of a store card is that the company usually offers discounts on shopping and bonus points to give you better prices on the products within that chain.
They usually also offer low rates of interest, so they are good for you if you buy products from that company on a regular basis. For example, if you do your food shopping there each week, then a store card could significantly cut down your expenditure.
Can I get a new credit card if I have a low credit rating?
There is such competition out there among credit card companies that you will usually be granted a card even if you have a bad credit history or county court judgement against you. As long as you are earning a regular income you shouldn’t despair, as you will still probably be able to find something that suits your needs.
Even if you do get declined at first, the company will often lodge an appeal for you to see if the original ruling can be overturned. Remember, you are the lifeblood of such companies and your custom is important, so you hold all the aces.
Is a guaranteed credit card good for me?
A guaranteed credit card is essentially a pre-paid card so you can only spend what you have put in to the account. You will typically have to pay a fee for this service but the benefit of such a scheme is that you can’t get into debt with the company and you don’t usually need a credit check or even a bank account to get one. So it’s a good alternative to having to keep lots of cash on you.
The less interest you have to pay, the better off you will be in the long run; these cards therefore work well for people who want to keep a tight grip on their purse strings.