You pay your bill off completely every month. You pay the minimum due every month, and you let a manageable amount revolve on your credit card. You pay the minimum due every month and your credit cards hover near their maximums. These are all payment profiles, one of which probably fits most credit card users, and there are a number of different credit cards that are tailored to offer the best value for any one of these scenarios. Match the right card with your spending and payment habits and you maximize your savings. Fail to do so and you might spend hundreds or even thousands of dollars needlessly.
The credit card service industry is a very competitive market place today. Many difference incentives are offered to you by credit vendors in an effort to win your business. You're probably familiar with most of these: low interest, cash back rewards, zero percent balance transfers, award points, special cards with pretty pictures on them. Many people, me included, are bombarded weekly by credit card offers that come in the mail at an alarming rate. If you've chose a credit card from that selection, you've probably chosen the wrong one for your spending habits.
One thing that all credit card offers have in common is this: all offers must contain a Truth in Lending Disclosure - it is required by law. Whether you receive an offer of credit in email or regular mail, you should make a game out of reading the disclosure before discarding. Pay particular attention to the interest rate offered - they're usually high, and aren't even close to the best deal that you can get if you shop for credit cards. As a matter of fact, some of the interest rates are astronomically high!
While you were scrutinizing that credit offer that came in the mail, or the one that they were offering at the mall kiosk, you may have noticed that the focus of their sales pitch was on one of these four types of rewards: 0% balance transfers, cash back, low interest rate(s) or award points. Also, whatever their area of focus, they didn't exactly shine in the other three areas and may actually be extremely predatory in one or more of those. Here are a few tips you can use to choose the right credit card for your payment and spending habits:
1) If you pay off the complete balance of your credit card every month, you don't need to pay too much attention to the interest rate of the credit card, but "Not too much" does not mean "No Attention"! Do pay attention "grace period" associated with purchases on your credit card - the period of time between when you make a purchase and when interest begins to accrue. A longer grace period is better. Choose a credit card that offers rewards, or if you have a balance on another credit card that is charging you interest, pick a card that won't charge interest on balances transferred.
2) If you keep a modest balance on your credit card (somewhere between 0% and 40% of the maximum amount of credit allowed) then you should keep a keen eye on the interest rate charged on that outstanding balance, but you may also want to look for a credit card that offers cash rewards for its use. This usage pattern is most common, and is actually the credit card usage pattern that favors your ability to build good credit; it shows creditors that you are capable of managing your balance and also makes you an attractive customer because you maintain a positive balance.
3) If your credit cards are always max'd out - at or near their limits - then interest is king. In choosing a credit card you should absolutely find the card with the lowest interest rate available. It may even make sense to pay a small annual fee just to drive the interest rate as low as you can. Don't depend on credit card marketing material that comes in the mail to help you find the best deal - shop for credit cards that offer the very lowest interest rate available, and the easiest way to do this by far is on line. With a low interest rate you can take control of the money that you pay in interest on your outstanding balance.
4) No matter what your payment pattern is be sure to pay your bills on time and always pay the minimum due at the very least. Credit card vendors have a nasty habit of ratcheting up the interest rate on your credit cards if you pay too little or too late - they sometimes do it without telling you, and your late payment on one card can affect the interest rates on all of your other cards. Be sure to read your credit card statement carefully every single month, and pay special attention to the interest rate that they're charging you.
The smarter you are as a consumer, the better your chances are to save serious money; this is true in most business and is true with credit cards. You can save a ton of money by shopping for the right credit solution - find one that fits your spending habits and your payment schedule and it can amount to hundreds or thousands of dollars per year in savings. Be credit smart: develop a habit of reviewing the credit cards in your purse or wallet several times a year and always be shopping for better offers. Chances are, if you're using a credit card that you've had in your wallet for over a year or two, there are better deals out there.
About the Author:
Kris has made a living helping individuals with their credit needs and low interest credit card product options for over twenty years. Click Here to compare low interest, no interest, reward, prepaid and 0% balance transfer credit card products.
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