A credit card could be a great financial tool if used wisely. But most consumers use their cards irresponsibly by making mistakes like overspending or not using the perks in the right way and end up building credit card debt. Since it can be alluring to accept every credit card offer you are presented with, there are several important things to consider when applying for a new card. One should do proper homework and research the presented offers and the credit card companies to choose the right one.
As there are several credit card companies with lots of enticing offers, choosing from all the available credit cards in New Zealand can be a daunting task. To help you out, we have listed some important things to consider when trying to decide which card is right for you.
Every credit card comes with a particular interest rate. A card with a higher interest rate costs more than others when a consumer carries a balance or failed to pay the balance in full. Credit card companies usually determine interest rates based on the credit score of a consumer. People with good credit scores are likely to enjoy lower interest rates than others. So, before you sign the dotted line, make sure to check the interest rate of the card you are applying for.
Some credit cards have an annual fee that a user needs to pay every year in order to keep using the card. Credit card annual fees can range from a few dollars to hundreds. Experts suggest getting a card with a low or zero annual fee. However, if there is a reasonable annual fee and lots of perks and rewards, getting such a card makes sense as it will help you save a lot of bucks throughout the year.
Credit Card Rewards & Perks
Most credit cards are promoted with enticing rewards. Credit card rewards can range from cash back, and free or discounted perks to free reward points that can be redeemed to save lots of bucks on air ticket booking or hotel reservations. Rewards can make a huge impact when it comes to boosting your savings but you shouldn’t choose a card just because of the rewards it offers. Make sure the offered rewards align with your financial needs and can help you save more without spending much. For instance, if you spend a big part of your budget on traveling every month, you should choose a card with tempting travel rewards like free air mileage, and a discount on hotel reservations.
Introductory Rates (APR)
Some credit cards usually known as balance transfer credit cards offer a low or zero interest rate for a particular period of time. This means the user can carry a balance for a particular period of time by paying a relatively low-interest rate or without paying a single penny towards the interest rate. When getting a new card, make sure to check the introductory APR rate and the duration you can enjoy that rate. A 0% APR rate can be offered by the credit card provider for 6 to 23 months.
A specific amount for which you can use your credit card in a month is known as the credit limit. For new users, a card with a low credit limit can work. But when you start using your card for hefty monthly payments and purchases, you should consider a card with a higher limit. However, you should keep your spending minimum at a lower utilization ratio to build good credit.
Foreign Transaction Fee
Some credit card providers charge a particular fee when you use your card in another country. A foreign transaction fee can add up quickly. This is the reason; you should check the card for a foreign transaction fee before signing the agreement and opt for a card with no fee charged on overseas transactions if you travel often either for personal or business purposes.
Look at the Penalties
When reading out the fine print, you should also look at the penalties section of the agreement. This may include the fees or other financial charges associated with the card. For instance, if you fail to pay the balance in full, what percentage of interest will be applied. Understanding how the credit card will work is the best way to use the card responsibly and avoid building credit card debt or paying additional financial charges or fees. If there are high penalties and fees, you must skip it for a better option. You can also use a credit card comparison service like Credit Card Compare NZ to compare different available options to choose the best one.
A credit card could be the best tool to pay for purchases or other transactions even when you don’t have cash in your wallet. But you must apply for a credit card that is affordable and wouldn’t build debt instead of building a good credit score. It must be something that helps you make payments conveniently, save money and build strong credit. As you receive so many credit card offers in your email inbox or get them in your social media feed, it is always a good idea to compare the available options to accept the right offer. You can also compare credit cards online using online comparison tools or websites. Credit Card Compare NZ is a reliable source to compare credit cards in NZ and shop for the best deals available.