Whether we accept it or not, a credit card is an important financial tool. It may not be essential, but we will definitely be giving up a lot of conveniences should we do away with this instrument. And among these benefits are:
1. It provides ready credit in case of emergencies.
2. It allows us to buy online.
3. Credit card purchases of large value items may come with an extended warranty that gives additional buyer security.
4. The judicious use of plastics enhances one’s credit score.
Choosing the Right Card Based on Needs
There is a plethora of credit card offers available, and companies providing this financial instrument are coming up with even better ones in order to garner a bigger share of the market. This is beneficial to the consumer since it allows him (or her) to select the most suitable package. But given the sheer number of options, the task of choosing can be daunting.
Your choice of card should be determined by your needs. Ordinary consumers, entrepreneurs, and students will have different requirements. 0 balance transfer credit cards may be most useful for consumers who plan to pay-off a high interest bearing card and move the balance to a facility offering 0% interest on balance transfer. Businessmen are likely to favor plastics with high credit limit. And students may be after the perks – points redeemable for gift certificates, cash backs, etc.
Before deciding on a card, it is best to obtain as much information as you can on the offers available. There are online sites that provide a side-by-side comparison of various credit card types, and this will be helpful in your selection process.
The Impact of Your Credit Score
A limit may be imposed on the credit card offers that we can avail of, and this is usually determined by our credit score. Of course, having an excellent rating will allow us the widest range of options. And usually these include the ones with favorable terms – 0% interest on balance transfer, 0% introductory APR on purchases, high credit limit, etc.
At the other end of the spectrum, those with fair credit have limited alternatives. And these packages are usually slapped with high APR’s, low credit limits, and other costs to boot. This means that low interest rate credit cards are out of the question for those with not so sterling credit score.
The Need for Discipline in the Use of Credit Cards
It is common to hear about people having credit card problems, and a number of them blame the instrument itself for their dilemma. But had they used the plastic judiciously, they would not have fallen into a financial quagmire. The bottom line is that credit card use required discipline.
The proper approach in using a card applies regardless of your credit standing. But a more conservative and disciplined orientation is appropriate for those with low rating. This is necessary in order to improve your credit score and avail of more favorable terms and financing packages in the future. Needless to say, your financial well-being is dependent on your credit score.
So if you are aspiring to avail of low interest credit cards, it is best to work on improving your score through on time payment and the proper financial management. The improvement may not come overnight, but if you work hard enough, a medium-term time frame may be realizable.
A credit card may be a boon or a bane depending on how you manage it. If you lack control, your financial well-being could be in jeopardy. However, disciplined use will bring about financial benefits.