Which Kind Of Credit Card Should I Choose?

Posted by Nick Niesen on October 29th, 2010

As even the briefest search on the internet will show you, there are thousands of credit cards available from many different providers, and even more sites offering advice on which card you should choose. Most card advertisements and promotions make a lot of noise about attention-grabbing features such as market-leading low rates, long balance transfer deal introductory periods, or enticing cashback or rewards programs, but some or all of these features may be irrelevant to you no matter how good they look.

What really matters when choosing a new card to apply for is getting the card with the right mix of features to suit the way you plan to use it. To ensure that you get the best deal available it pays to take a little time out to think about the ways in which you normally use your card.

In today's increasingly cashless society, many people use plastic as simply a convenient payment method, clearing their balance in full every month. This frees them from having to carry large amounts of cash around, and makes it easier to keep track of their spending with online account management and the like. If this is the way you plan to use your card, then the interest rate doesn't really matter to you. Considering that you'll be clearing your balance every month, then you shouldn't be charged interest at all.

What's more important is to get a card that rewards you in some way for using it, either through cashback where a small percentage of everything you spend is credited back to your account, or with a rewards program that will allow you to build up points which you can later redeem to get cheaper goods or services.

If you plan to use your card to fund larger purchases such as home electricals, with the repayments being spread over several months, then the APR of a card is the single most important feature to look for. A low APR means that more of your repayments go towards clearing your debt rather than servicing the interest charges. This means that your debt will be cleared more quickly, and will have cost you less to take out in the first place. It may also be worth looking for a card which offers a long 0% introductory period on purchases, with many cards now offering a deal of 12 months or even longer.

The most common way of spending with a card is to have a mix of large and small purchases, repaying a reasonable portion of your spending each month but sometimes carrying a balance over if funds are a little short. It's also common to want to transfer a debt from a more expensive account such as an older credit card or an expensive overdraft. For this kind of mixed use, a relatively new kind of card can be a good fit.

A 'flat rate' card charges the same low interest rate for each type of card use, whether purchases, balance transfers, or even cash withdrawals. The low interest rate means that your credit costs less and can be cleared more quickly, and the simplicity offered by having just one APR for everything means you know exactly where you stand.

So no matter how impressive a new credit card may seem, with a wide range of eyecatching features, it really pays to decide which one to apply for based on your own needs and spending habits rather than the features that card issuers tell you are the most important!