How to Choose a Reputable Credit Card Company
A credit card when managed well is a necessary item that everyone needs. For instance, if you are a monthly earner, you need to be able to access groceries and other essential commodities while you wait for your salary. This is when a credit card comes in. Your credit card allows you to purchase groceries and you should pay back their money when you get your salary. However, a credit card when misused can land you into a pit of debt that might be very hard to come out of.
A credit card makes you think you can afford almost everything even without money. Some companies give a lot of premium which can be tempting. If you are an impulsive buyer, you need to think twice before acquiring a credit card. One of its advantages is that it teaches you financial discipline like saving and paying debts. Also, it teaches you to budget otherwise you’ll always be in debt.
There are very many factors you should consider before you go for your first credit card. Your first credit card will build your credit history that might impact your financial life for the rest of your life. Therefore, you need to do your research on different credit companies. Consider a company’s interest rate, credit limit, and annual fee. Also, look into the late fee charge of each company and rewards or gifts a company offers. Let us delve deeper into these factors below.
Interest Rate
The first step towards achieving most things in life is to do research. For this case, you’ll need to contact different credit card companies and research on their individual interest rates. It’s hard that you find 3 or more companies offering the same interest rate. Therefore, you’ll want to choose one with the lowest interest rate. There are other factors that banks consider before they set their interest rates. For instance, student credit card should have the lowest interest rate.
The assumption is students may not be working and even those that are working, it is part-time hence earn very little. Therefore, they cannot afford a high-interest rate. Also, you need to consider your income. If you opt for a credit card whose expense exceeds your income, you’ll always carry a balance forward even if you pay the minimum payment. This is common in students and low-income earners.
Annual Fee
Different credit companies will ask for varying annual fees. Credit card annual fees range from $99 to $150. Usually, credit cards that ask for an annual fee are rewards credit cards and to maintain it, you must spend enough to offset the fee. If you are a student or a low-income earner, this type of credit card may not work for you.
Credit cards with annual fees are ideal for people who shop frequently as the rewards keep accumulating and can offset or balance the annual fee. Look for companies whose credit cards don’t require you to pay an annual fee. However, most companies have both cards; those that require an annual fee and those that don’t. The choice is yours.
Rewards
Very many credit card companies have cashback credit cards and travel rewards credit cards. This is a great way of earning perks on each dollar you spend. Travel rewards credit cards reward you with points on every shopping you do. These points you can redeem for travel-related expenses like booking hotels, car rentals and flights. If you are a frequent traveller, you might want to consider this credit card.
On the other hand, cashback credit cards give you a certain percentage of your spending in cash. Usually, the percentage of your cashback ranges between 1% and 4%. Depending on the company, you’ll receive the cash either quarterly or annually. Such a card is ideal for people that shop regularly since their rewards can accumulate so fast.
Income Requirement
This should have been my number one factor. Of course, you need to get a credit card company that considers your income. For instance, a good company should understand that students have very little income and hence cannot afford certain credit cards. Also, when a company appreciates this, it will lower its terms and conditions, interest rate and annual fee. A good credit card company should sit you down and enlighten you on the different types of credit cards based on your income.
Reviews
Customer reviews mean everything in business. Read and find out what other people are saying in regards to a particular credit card company. What are their terms and conditions? How do they treat their clients? How do they treat defaulters? Other things like the process of redeeming perks and if they are acceptable in most hotels and flight companies should also be considered.
Last Remark
Before settling on a credit card company, you should consider some factors. These include their interest rate, income requirement, rewards and client reviews. There is no reason why you should get a credit card whose interest rate is high yet you can get a subsidized one elsewhere. Also, why should you pay an annual fee yet you can have a credit card without paying an annual fee?