A credit card can be a convenient staple of your financial life and these days, there are countless options available. Credit card advertisements are nearly impossible to avoid; you’re likely constantly bombarded by offers of frequent flyer miles, attractive APYs and loyalty points programs. All of this advertising can make deciding on a card a daunting task. But the truth is, choosing the right credit card and knowing how to use it wisely is important and can have a large impact on your finances.
Selecting the card that is right for you should be dependent on several factors: fees, rates and benefits for using it. Few credit cards will rank highest on all of these factors, so you should choose the card that ranks highest based on how you plan to use it. Here are some things to keep in mind when evaluating card options:
Many cards are offered with no annual fees, while others charge up to $50 or $60 per year. Ideally, you would want to choose a card with no annual fee. Remember that companies also charge fees for late payments. Be sure to check the terms of the credit card agreement, especially if you are occasionally late with a monthly payment.
Obviously, if you carry over balances and are subject to finance charges, you want a card that offers a low rate. Rates can vary by over 10 percentage points and can sometimes exceed 20%. You should also be very careful of low “teaser” rates, or special rates for a limited time if you transfer balances from another card. Another way card companies increase the amount you pay is by how they calculate the interest. Be sure to read the details of the agreement.
Benefits for use
Using a credit card can bring the rewards of airline mileage, discounts on travel, electronic gifts, discounts on cars and other benefits. A general “rule of thumb” is that the benefits are usually worth about 1% of the charges. If a card with these types of benefits is important to you, make sure the benefits are those that you will use and that the other aspects of the card do not offset the benefits.
When making a decision about a credit card, be sure that the one you choose provides the right combination of fees, rates and benefits. If you do not carry over balances and pay finance charges, you might be willing to accept a card that has high rates and maybe even an annual fee if the benefits are your main focus. However, if you normally pay finance charges or interest, pay extra attention to the interest rate.
Another thing to keep in mind is the company providing the card. You’ll want to be sure their level of service is acceptable and that the company is one that you trust. Also, consider using a card offered by the financial institution where you do most of your banking; having your credit card through your bank can provide a little extra convenience.
Want the convenience of a credit card through your bank? Community Bank of the Chesapeake now offers credit cards through Visa®. Find the card that’s right for you. Call 888-745-2265 or stop into any of our convenient branch locations to learn more, or apply online.