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  • Writer's pictureSmartPennySaver Team

5 Things To Consider When Choosing a Credit Card

Nowadays there is an endless number of credit cards available in the market. It doesn't matter if you're applying for a credit card for the very first time or looking just looking for a better card to meet your needs. When you're looking for a new credit card, be sure to do your research. Here are five things to consider before choosing a credit card.

1. Annual Percentage Rate (APR)

This is a big one! If you don’t pay the whole credit card balance off each month by the due date, the interest can accumulate and overwhelm you. You should aim for the cheapest APR while comparing credit cards. Some cards may offer an introductory rate of up to 0% APR and that’s a great deal but you have to be sure to research the fine print. Just remember, when it comes to APR, the lower the better.

2. Annual Fee

The annual fee is a yearly charge for using the card, this charge is added to your amount due and must be paid in full in time if you want to skip the interest. Some of the cards that charge an annual fee may offer come with better incentives the free cards do not. Some cards with better rewards may offset the charge of the fee if used properly. Cards that charge an annual fee may offer better rewards, but be sure to do the research before taking on any new cards.

3. Charges and Penalties

Although there are some exceptions, most credit cards have charges and penalties for different situations. You will usually be charged for balance-transfer and cash advance fees, foreign transaction fees, making payments by phone, paper statements fees, late fees and going over your credit limit. These charges can really add-up over time so be sure to keep these at a minimum.

Research and understand all the charges and penalties associated to the credit card. Look for ones with reasonable fees or even the ones with no-fee offers available. Also, remember that a full understanding of the fees attached to your card is the best way for you to avoid unwanted fees and penalties.

4. Rewards

As you might know, one of the biggest perks of using a credit card are the incredible rewards programs they offer. Your everyday purchases can give you points for you to use on cash back, travel, retail purchases and more.

Do some research and look for credit cards that give you the most rewards with the smallest annual fee. Credit card companies will offer cash bonuses, points or cash back on credit card spend. Take the time to read about the rewards program and restrictions or fees that may apply before choosing a card.

5. Credit Limit

This is the maximum amount that the bank will lend you, the amount can range from a few hundred dollars to thousands of dollars according to your credit history. Responsible management of your credit limit is essential to build a good credit score and stay out of debt.

Prepaid or low-limit credit cards are good for students or anyone that is still learning how to purchase on credit. Getting a higher limit can benefit your credit over time. The better and more seasoned your credit history the higher credit limit you will be extended.

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