Which is the Right Credit Card for You?

If you find yourself confused about which credit card to select, then here are a few tips to help you make a firm decision. First, ask yourself, why do I need a credit card? Other than convenience, generally, people will opt for a credit card because they wish to:

• pay off debts they have incurred from other sources


• pay for costs over a period of time


• make purchases between paydays

Credit Cards for Paying Off Debts

Very bad idea. If this is your reason for applying for a debit card, don't. Period. Use the more conventional strategies for paying off debt, for example, approach your bank or the National Debtline for more advice. If you use your credit card to pay off debts, you will find yourself sinking into more severe debt due to the high interest rates that credit card companies charge.

Using Credit Cards to Spread Costs

Any credit card company will slurp and drool and fervently pray you use their card for spreading your costs over a period of time. That's because you will help them earn some money for themselves. If you plan to pay for a large purchase like a car or a house over a period of months or years by using your card, effectively you are borrowing money from the company. They will, in return, charge you a high rate on interest for giving you the money upfront and allowing you to buy your dream house, etc. And the longer you take to pay it back, the more interest you pay.

Credit Cards and Paydays

This is perhaps not-so-attractive for companies. Basically, you borrow funds throughout the month that you then pay back completely when you get your next salary. This is normally within the interest free period offered, so that technically as long as you make payments on time you get to borrow money for free. However, if you make some miscalculation, have to pay a huge unexpected amount of money for an emergency, or if you lose your job, you will have to pay hefty interest on the amount you borrow. Also, you must pay off the outstanding regularly on your payday in order to avoid getting sucked into the credit cesspool.

If you are a disciplined, moderate credit card user, this might be the best way to use a card. Despite this you should beware of overspending or you might find yourself using up your next salary almost as soon as it has been credited to your account. However, just in case you cannot make regular payments for some reason, do select a card that offers you the lowest rate of interest on outstanding balances. Check and compare APRs because ultimately that will determine the amount you pay for your purchases.