What's the best type of credit card for you?

By Chesutiko

Chances are good that there is one credit card out there that is just right for your lifestyle. All you have to do is find it. There are so many different types of credit cards out there, it can be very confusing to know which one would suit your needs best. However, if you know a little about some of the extra features of these cards, it can help you better make a decision.

Rewards programs
These reward you for using a credit card by offering such bonuses as shopping vouchers and discounted airfares. Usually, these rewards come at a cost: either higher interest rates or a higher annual fee.

Before you sign up, ask yourself whether the rewards you gain are worth that extra bit of money you may have to pay each year. Keep in mind that it may take a while to accumulate enough points to earn a decent reward; only if you are using your credit card to purchase expensive items on a regular basis will it be easy to attain the best rewards.

Balance transfers
Some credit cards allow you to transfer the balance from one credit card onto your new card at a reduced interest rate for a limited period of time. Sometimes this rate can be as low as 0 percent for six months. This is a great option if you have multiple credit cards, and you just want to put all of that debt onto one card to make it more manageable. Since the interest rate is 0 percent for the first six months, this means you won't have to pay any interest for half a year; in the meantime, you can be paying off your debt. However, if you aren't able to pay off the debt within six months, you will be stuck paying whatever the default interest rate for that card is. It's best to find out what that is up front, or you risk paying even more than you were before on the other cards.

Lower annual fees
Low annual fees may be extended as part of an introductory offer, often by smaller financial institutions looking to attract new customers. The lower annual fees are usually continued if certain conditions are met, such as a certain amount being charge to that card within the same year.

Store cards
Many may choose to open up a credit account with a store or wholesaler, as it will provide them with benefits such as extended interest-free periods, extended guarantees and warrantees and discounts. In return, store cards generally carry charge higher interest rates than other credit cards. Store cards are recommended for those who often purchase items from one particular store, such as contractors who patronize a single hardware chain.

Which is best?
The type of credit card that is best for you is the one that is most likely to suit your needs and expectations. In short, the best credit card will be the one that saves you the most money or provides you with the most benefits.

Article by Chesutiko

Published: June 2, 2009