A credit card is one of the most contemporary and efficient ways to support your expenses and keep a backup for your hard times. It is a support that your bank provides you in your tough times when you lack money to deal with any matter. However important is to make sure that you are using this facility in the right way.
Nothing comes like a piece of cake; you need to put some efforts and attention to earn the benefits of anything. Likewise, you need to apply for the best credit card package and services that suit your earning capacity and expenses. A credit card is not just of one type. There are different types of credit cards with different packages. Every bank offers different kind of benefits or services to the credit card users at different stages.
To get a credit card for you, important is to learn what a credit card is? How it helps you? what must you know before applying for a credit card? The answer to all these questions will help you make a better decision for your expense management and thus, better future.
How to Choose a Credit Card
Among hundreds of credit cards, you must go for the one that suits you the best.
To choose the best credit card for you, first of all, you need to know that why you are looking to have a credit card? You can think of having a credit card for the following reasons:
- To buy stuff online or shop during holidays
- Pay your bills online
- To keep some backup amount for use at times when you run out of cash
No matter for what reasons you choose to use a credit card, the important thing is that if you will be paying off, the amount you owe each month or just spreading the repayment for a long period.
If you are able to pay the utilized amount, on the whole, each month, you will be able to earn advantage of the interest-free period. In such a case, the interest rate may not be that important for you but, you might have a look at the credit cards that come with random incentives. There are many cards that offer you discounted shopping on famous brands. Most appreciated and trusted credit cards also offer facilities to the customers on special occasions like Eid or new years to shop with discounted price.
Even if you are able to pay the full amount at one time, it is important to plan what you will do if you are not able to do so?
What If You Will Not Pay Back the Amount Used?
If so, you will end up paying the interest on the amount spent. Every bank has different interest ratio on different cards and with different packages. The exact amount of interest depends on what package or card you are selecting.
Thus to take complete benefit of a credit card it is important to spend wisely. Do not go for a random shopping just because you have amount limit on your credit card. Do not forget to be sure that you are able to pay the used amount, tomorrow or the day after.
Following are some key terms you need to get hold of before applying for a Credit Card:
The Annual Percentage Rates
The cost of borrowing on your credit card, if you are not able to pay the used balance each month. Compare the percentage rate with different cards you are considering or are offered to you. Go for the one with the cheapest percentage. Also compare the points like charges, incentives and fees.
When you are not able to pay off the used balance every month, the credit card supplying authorities will ask you to pay the minimum amount. Most commonly it is about 3% of the net amount that you need to pay. However, it can vary. So check and compare before making a final decision.
It is also important as there are some credit cards that charge annual fees for using their services. This fee is added to the amount you need to pay back to the card. Important to note is that you will have to pay an interest on the fee as well. But if you are paying it fully, you won’t need to pay any interest.
Charges of the Credit Card
For this you need read the credit agreement in detail and check what are the other charges that you will have to pay? Usually, you will have to pay if you have gone above your credit limit, if you used the card abroad or if you made a late payment.
The Introductory Interest Rates
This is the point where you will pay low interest or not at all. After a certain time limit, this rate will increase. For example, it will increase after 6 months or a year staring form a certain date. If you are comparing different credit cards, check which introductory date rate will last the longest. Also, check the change in interest rate at the end of the introductory period.
The Rewards of Loyalty Points
These points end up depending on the amount you spend and then use them to buy things. This can be a particular shop or brand. Check how these rewards can be used and how they can give you benefits.
Getting the Cash Back
As you are paying some amount to use the facilities of a credit card, so it is your right to know how and when you will get money refunded to your card, depending on the amount you spend. For instance, in some cases, it implies only when if you are paying your balance in full, every month. Prefer to go for a lower interest rate. Choose a card that is offering you the lowest interest rate among all the shortlisted credit cards.
You Can Apply for Credit Card
- By online form filling at bank website of the service provider (available in some cases)
- By post
- By call
- By visiting the bank building/branch
- Or simply apply through Smartchoice.pk
You will fill the form and the service provider will check the record you have provided and will check if you are eligible to own the credit card or not. The services provider will check your bank records that are commonly known as the previous bank statement.
Your bank statement will tell the financial analyst if you are a good earner or how you spend your money, how much money do you normally borrow etc. it will also tell if you are good payers and follow laws and regulations or not.
Read the application form carefully before filling it and up and before signing it. Make sure that you are presenting all the information right. Any false information or misleading will lead to rejection of credit card services. If you are not sure how to fill the form you can ask the credit card service provider, or the bank representative to fill the form for you.