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| Which Kind Of Credit Card Should I Choose? |
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Thursday, September 6, 2007
What really matters when choosing a new card to apply for is getting the card with the right mix of features to suit the way you plan to use it. To ensure that you get the best deal available it pays to take a little time out to think about the ways in which you normally use your card. In today's increasingly cashless society, many people use plastic as simply a convenient payment method, clearing their balance in full every month. This frees them from having to carry large amounts of cash around, and makes it easier to keep track of their spending with online account management and the like. If this is the way you plan to use your card, then the interest rate doesn't really matter to you. Considering that you'll be clearing your balance every month, then you shouldn't be charged interest at all. What's more important is to get a card that rewards you in some way for using it, either through cashback where a small percentage of everything you spend is credited back to your account, or with a rewards program that will allow you to build up points which you can later redeem to get cheaper goods or services. If you plan to use your card to fund larger purchases such as home electricals, with the repayments being spread over several months, then the APR of a card is the single most important feature to look for. A low APR means that more of your repayments go towards clearing your debt rather than servicing the interest charges. This means that your debt will be cleared more quickly, and will have cost you less to take out in the first place. It may also be worth looking for a card which offers a long 0% introductory period on purchases, with many cards now offering a deal of 12 months or even longer. The most common way of spending with a card is to have a mix of large and small purchases, repaying a reasonable portion of your spending each month but sometimes carrying a balance over if funds are a little short. It's also common to want to transfer a debt from a more expensive account such as an older credit card or an expensive overdraft. For this kind of mixed use, a relatively new kind of card can be a good fit. A 'flat rate' card charges the same low interest rate for each type of card use, whether purchases, balance transfers, or even cash withdrawals. The low interest rate means that your credit costs less and can be cleared more quickly, and the simplicity offered by having just one APR for everything means you know exactly where you stand. So no matter how impressive a new credit card may seem, with a wide range of eyecatching features, it really pays to decide which one to apply for based on your own needs and spending habits rather than the features that card issuers tell you are the most important! About the Author: Michael is a writer for UK credit cards site Card Sense, where you can compare balance transfers and cashback deals as well as read general credit card articles and news. Charity Credit Cards - A Good Deal? Charity credit cards have become increasingly popular over recent years, as people seek to support their favourite charities at seemingly no extra cost to themselves. When you take out one of these cards, a one-off donation of a few dollars is made by the card issuer to the charity linked to the card, followed up by a small percentage of everything you spend, again donated by the card company rather than the cardholder. Cards are available covering a huge range of charitable organisations, from local to national and even international, and there is almost certain to be one that supports an area of concern to you. All this sounds like a good deal for everyone involved, but is the picture as simple as that? The first drawback to a charity card is that the interest rates, balance transfer offers, and other deals are rarely as generous to the cardholder as those featured by other cards that compete under being a 'best buy' card. This may be a price you feel worth paying for the benefit the charity will receive, but you might in fact be better getting a cheaper card and donating the money you save to your charity directly. Even putting aside the issue of higher interest charges, charity cards have another drawback - the percentage of what you spend that is donated is usually tiny, with 0.25% being a typical figure. Compare this to a typical cashback card which will pay between 1% and 2% of your spending, and it's easy to see that the card issuer may not be acting as generously as it appears. Again, by donating your saved up cashback directly to your chosen charity you might have a larger impact. The other point to bear in mind is that the money charities get from the credit card companies isn't classed as tax-free, unlike direct donations, making it even less valuable. So are charity cards a waste of time? In terms of actual sums donated they might seem so, but there are advantages to the charity concerned above and beyond the simple percentage donations. Firstly, by using your card you're helping to publicise the charity you're interested in, just by the simple act of handing it over to counter assistants, waiters and the like, who will notice an unusual card, as will your friends and colleagues. Secondly, the charity is guaranteed that the donations will be made, however small. If you save up your cashback with the intention of donating it, there's always the chance that when you actually get the money you may have another pressing use for it, and the charity misses out. Lastly, and perhaps most importantly, the huge marketing muscle and advertising resources of the card issuer are put towards publicising the card and the charity, at least to some extent. This means that more people will probably end up donating in total, even if the individual figures are smaller, and the charity gets more exposure in general. So in summary, while charity cards may not be the most effective way to donate to charity, and they certainly aren't among the most attractive cards on the market financially, they can still be a worthwhile option if you find a card supporting a charity you have an interest in helping. About the Author: Michael writes for credit cards review site Card Sense, which has sections on charity credit cards along with balance transfer deals, cashback cards and rewards schemes. The Most Popular Uses For A Personal Loan The number of people taking out personal loans has risen dramatically over the last ten or fifteen years, but what are the reasons for this? In this article we'll look at the main uses of the loans that we take out. Debt Consolidation This is possibly the biggest single reason people take out a personal loan, with billions being lent to help people sort out their finances. The basic idea is to take out one single loan that you use to pay off all your other debts, leaving you with just one repayment to make. Not only does this make your financial life simpler and more easily managed, but if done properly the result should be that your debt is costing you less overall to service each month. New Car Although there are many different kinds of auto finance available, from basic car loans to vehicle plus finance packages, many of these deals work out to be quite expensive, and are often suited to people with poorer credit ratings. A normal personal loan, with a lower interest rate and less restrictions, can be a better option for funding a vehicle purchase for many people. The key benefit is that you're free to spend the loan amount on any car from any dealer, or even buy privately - an option not usually open to users of dedicated auto finance packages. Home Improvements The extreme rise in property prices over the last decade or so has left many people with large amounts of equity in their home. This means that their house is worth far more than the mortgage still owed on it. For some homeowners it can make good sense to 'cash in' some of this equity in the form of a loan, using the money to reinvest in their property by improving it. This can mean extra building works, improvements to faciilities such as bathrooms and kitchens, landscape gardening, or any other costly exercise that will ultimately increase the value of a property even further in the coming years. Vacation or Travel Also given the large amounts of equity many people have, a popular option is to free up some of this cash to finance a once in a lifetime vacation, cruise, or other kind of expensive travel. It's not generally recommended that you use your home as collateral for this kind of loan spending, as you'll be risking the future of your home with little to show for it once the vacation is over. An unsecured personal loan, however, is an ideal way of spreading the cost of an unforgettable experience over a year or two. Wedding One final popular reason for taking out a personal loan is to pay for a wedding, either your own or a child's. Weddings these days can be incredibly expensive, usually running well into four or even five figures, and not many people have this kind of money in reserve. Naturally, a wedding day should be a day to remember always, and so many people feel it's well worth the cost of taking out a loan in order to make the day as perfect as possible. The funds will also be useful in paying for a great honeymoon, and even providing a few household essentials when moving into a first home. About the Author: Michael writes for the personal loans comparison site Loan Time, where you can compare loan deals from big names like Capital One and more, along with poor credit loans, unsecured loans, and deferred loans. |
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