Credit cards can be both a good thing and a bad thing. It may be compared to a chainsaw which is a very handy tool, but can also cause enormous damage. The same applies to having a credit card; it can get you out of a fix or get you into one.
Before you apply for a credit cards the several things to keep in mind. .
1. Spending habits. You need to honestly analyze your spending habits. Determine if you are in control of your finances, or better still determine if you can control your expenses.
If you are good at handling your expenses, you will probably use the card for emergencies. As such, you should go for a card with no frills and a low interest rate. In the event that you will be paying your card in full every month then the interest rate will not really matter to you.
2. Interest rate. The interest rate charged for using your card can either be variable or fixed. For a fixed rate you know what to pay every month while for a variable rate fluctuation is the order of the day. However, a fixed interest rate may at times vary if you go over the limit or due to a late payment.
3. Credit limit. When applying for a credit card you must look at the amount the card issuer is willing to extend to you for borrowing. This will be determined by your credit history.
Choose a limit that is ideal for you so that you avoid maxing on your limit every month. This may lower your credit score or cause a reduction on the limit by the borrower.
4. Fees. Be aware of the fees and penalties you will be charged. There are several ways a card issuer uses to make money from you. These include fees on transactions like balance transfer and payments by phone.
Choose a credit card company whose terms are fair.
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