Credit Card Options: What to Choose?

by : Michael Huch

Now that you have to have a credit card to do most things that you want to do, banks are finding ways to cash in on this. They are offering incentives to get you to get their card and use it more. What options should you choose? Here is the guide.

One of the incentives is weather to choose a fixed rate or a variable rate. A fixed interest rate is very good option. A fixed rate will not change no matter what happens with current economical situation in the coutry. A fixed rate card will help you know from month to month what your APR will be without any surprises. Unfortunately, there are not many companies offering fixed interest on cards now. But still there are some.

A variable rate can change from time to time. If the economy goes down, your credit card rate goes up. If the lender need to borrow money from the government and they are charged a higer interest rate, that will absolutely affect your APR too. This options is less recommended, you you have a chance to get around it. One thing you have to be careful of is surprise monthly payments. If you go out and go on a spending spree and are not able to pay off the credit card in one month then the interest charges are applied and your monthly payments can soar like a rocket.

One more feature, that banks are offering is balance transfer. This is where you can use one credit card to pay off the other. The only problem with this is that the debt doesn?t go away it is still there just on another card. These incentives are usually offered to new customers and have a limited time they also come with an introductory interest rate offer. As soon as the introductory period has passed, you will pay the interest the the amount you transferred. The only way this option could work well is if you pay off the debt during the introductory period or before the higher interest rate applies to your transfer. Other than that this option is not a good idea. One major disadvantage to transferring from one card to another is an invitation for people to go shopping again and charging up the card that has no debt on it. This creating two cards with debt.

While transferring debt from one card to another, you should pay attention to the ?transferring fee?. It means that, to take advantage of low introductory rate, like 0% for 6 or 12 months, you will be forced to pay 3% of the transferring amount, but usually not more than 100$. Also, you need to pay attention to annual fee. It can be free for the first year, but then you could end up paying from 20 to 150 dollars a year.

In today?s society you have to have a credit card. Banks are making them look more exciting by offering things like the option of a fixed and variable rate and balance transfer options. The only way that your credit card will not drive you crazy is to watch you spending and pay your bill in full every month. Otherwise when you transfer money it may seem like a good idea but if you do not pay it off before the introductory time period you most likely will never pay it off. Going with variable percentage rate could make sense if the economy is going up and will stay there for a long time, but if it goes down you will pay this change with your bill. A fixed APR is one of the best ways to protect your monthly payments from month to month.