Selecting the Right Credit Card

Nowadays, the most popular method of payment for purchases is the credit card.  For those that are inexperienced with credit, selecting the right credit card might appear to be an easy and straightforward task, especially with all the credit card solicitations.  Yet, it is not wise to apply for a line of credit just because you received an offer by mail.  

The best way to ensure that an offer is right for you is to comparison shop.  This will ensure that you select the right credit card, instead of the credit card company selecting you.  With the large number of various perks attached to each credit card, only you can determine which features and benefits are right for you. 

The largest key factor that you should consider when selecting a card is to determine in advance how you will use it.  There are three common uses of credit, each of which has a different type of card that is right for each type of use. 

1. Use as method of payment for purchases and the entire balance is paid in full every billing cycle.  The ideal credit card to select for this type of use has no annual fee or membership fee and offers a grace period that is as long as possible.  The definition of a grace period states the total number of business days in which you are not charged any interest or finance charges on purchases. 

2. Use as a method of payment for purchases and only the minimum amount due is paid each billing cycle.  With this type of use, it is ideal to select a card with the lowest interest rate.  With the lowest interest rate possible, you are paying the least amount in interest.  More of your minimum payment goes towards your balance, not your interest, so that the actual balance forwarded to the next business cycle is lower. 

3. Use as a method of cash advances and you pay the entire balance or forward the balance into the next billing cycle.  The ideal credit card to select has the lowest possible interest rate and has lower cash advance fees. 

Every offer of credit is different and suits a different type of use.  The majority of lenders usually have a multitude of different offers to select from, which means you are able to select a card that meets your needs. 

A secured line of credit provides credit based on an initial deposit.  Your credit limit is set according to the initial deposit.  A secured line of credit is ideal when people have bad credit or no credit history.

A regular line of credit does not provide credit based on your initial deposit but rather your credit worthiness.  This type of credit typically has a lower credit limit in comparison to a premium line of credit. 

A premium line of credit usually has higher line of credit and offers better perks as incentives to use it, such as special rebates, coupons, travel insurance, hotel discounts, travel points and roadside assistance.  This type of credit is typically offered as either a gold or platinum line of credit.

In the end, the credit card that you select will be based partly on which offers that you qualify for depending on your credit worthiness.  If you have excellent credit, you may be able to obtain a premium line of credit with great perks.  However, if your credit is less than stellar, then you may have to settle for a secured line of credit. 

After some smart comparison shopping, you will be able to figure out what type of credit line that you will qualify for, in general, from most lenders.  Then you will be able to select the right credit card from multiple offers by comparing interest rates, limits, grace periods, and perks.