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In researching and selecting a credit card there are a number of factors you need to consider.
The first question you need to ask yourself is what do you really need a credit card for?
- Are you looking for short term credit flexibility and have every intention of paying your card off at the end of each month.
- Looking to use it for one off purchases and in emergency situations when you don’t have readily available cash.
- The flexibility of being able to pay for things over a period of time to lessen the blow.
- To support your favourite football team or charity.
- To earn reward points when you buy thins to get discounts off products and services e.g. air miles.
Secondly what features in a credit card are most important to you?
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Different cards offer different deals on interest free period for balance transfers, purchase periods, cash advances and how you can use credit card cheques.
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Many card companies offer online management although if you like to receive statements in the post as well check that this option is available.
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Cashback can be an attractive selling point but there are usually strict rules imposed by companies on how your card is managed to ensure you enjoy this feature.
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Overseas features – some cards offer better deals when used outside the UK
Thirdly how do you think you will use your card?
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If you clear your bill every month then you may avoid paying high interest charges so deals on cards with long interest free period on purchases may be of little interest. You might be better going for cards with reward points and cashback features.
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If you often only pay part of your credit card balance every month, then a card which offers a long interest free period is probably a good move. Many cards now offer interest free period on purchases up to 9 months.
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If you use your credit card for withdrawing cash it is important to realise that most card companies will charge a higher rate of interest for this so again shop around for the best deals. The variations on interest charged on cash withdrawals can be very significant.
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Thinking of consolidating other credit cards into one card, then a card offering a good deal on balance transfers should be a priority. Some card companies offer 0% interest deals on balance transfers up to 9 months. It is important to read the small print as some companies now charge a fee per transfer to the card. In addition check out the standard rate when the interest free period expires.
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If you do travel abroad regularly a card with competitive fees on transactions in foreign currencies is worth considering.
In addition to these considerations many companies offer cards that range from standard cards that are available to anyone over 18 and UK resident subject to status to gold and platinum cards which are more exclusive. Affinity cards issued on behalf of organisations such as charities and football clubs are designed so that every time you use your card a fraction of the amount that goes on your card is passed on to the affinity group by the card issuer.
Other incentives offered by card companies include:
- Warranty protection for good purchased through your card for a period of time.
- Travel insurance
- Purchase protection insurance for a period in the event that goods purchased through your card are lost or stolen.
- Protection against identity fraud