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Choosing A New Credit Card
1. Choosing A new credit card
There are many reasons for choosing a new credit card.
It may be your first card or you may wish to reduce the amount
of interest you're paying each month or if you're lucky enough to
pay off your balance each month you may wish to take advantage of
one of the many reward schemes around.
To help you choose we have compiled a set of questions and
answers. One thing to consider is that you need more than one new
card. For example if you have an outstanding balance and use
still make purchases you should consider switching to a balance
transfer card for the outstanding balance and a seperate card for
the ongoing purchases. This is provided you pay off the ongoing
purchases of course.
2. What To Ask - Standard Questions
Scenario : You pay off your existing balance each month
Solution : Choose a reward scheme card. These will either pay be
cash or may be points that can be used to purchase certain
products.
Scenario : You have an outstanding balance but still make
ongoing purchases Solution : Transfer the existing balance to 0%
balance transfer card and at the same time get an introductory
purchase offer card. This way you can allow the introductory
purchase card balance to build up, while you pay off the balance
transfer card. You need to be very disciplined with approach
though. If you have taken up a balance transfer then try to avoid
new purchases on this card as repayments are weighted towards the
lower interest part of the balance.
Scenario : You have a large purchase coming up Solution :
Apply for an introductory purchase card and then pay off the
balance over the period of the offer.
Scenario : You have a poor credit history Solution : There are
some high interest cards around for people with a poor credit
history. If you do obtain one of these cards then make sure you
always make your repayments. This way you will slowly build up
your credit rating, which will eventually make the lower interest
cards available to you.
3. Can your existing card be improved
This is one option that most people completely ignore. It is
entirely possible that you may be able to negotiate a new rate on
your card, especially if you have another card with a lower rate.
They can only say no, so what have you got to lose.
4. Should I close my existing card
Not neccessarily is the answer. You may be able to use this
card in the future for a balance transfer. Also, don't forget
that you normally get around 58 days interest free credit. So you
may be able to make the odd one-off purchase and spread the cost
over a couple of months.
5. Finally ...
Please remember the golden rule. Only borrow what you can
avoid to borrow. If you are careful you can make the credit cards
work for you, but if the credit card companies make a lot of
money out of people allowing the spending to get out of control.
Don't allow yourself to be one of these people.
Neil Brown is a freelance writer who makes regular
contributions to Credit Card
Applications, Loan Applications and
Credit Card
Companies.
MORE RESOURCES:
Credit - Google News
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