Looking for a Credit Card for Christmas Shopping?
Before you submit a credit card application, first review the main points which will help you choose the right credit card for your needs.
What Charges You'll Make - If you're going to use the credit card mainly for booking airline reservations and hotels, it might be best for you to get a travel credit card that offers sky miles and hotel points or cashback. If this will be an emergency credit card only, then your main concern may be for a low interest rate credit card with low fees.
When You'll Repay Charges - Will you pay off credit card charges in full every month, or will you carry a balance month to month? If you're going to carry a balance, you want the lowest possible interest rate as well as a low introductory rate. But if you'll payoff balances in full every month, then interest rate really doesn't matter so no annual fee and/or a long grace period would be a bigger concern. If you're going to carry a balance, be concerned about how the finance charge is calculated. The most common method is the Average Daily Balance, which means that the daily balances are added together and then divided by the number of days in the billing cycle. Stay away from credit cards that compute the balance using two billing cycles, as this method costs more money in financing fees.
What Amount You'll Charge - If you're going to use the credit card for all your monthly expenses, then you need a card that has a high credit limit and a high cashback percentage.
More info about Interest Rates, Credit Limits, Incentives, Fees and Penalties
Interest Rates - The interest rate (Annual Percentage Rate) APR can either be a fixed rate or a variable rate that is tied to another financial indicator, most commonly the prime rate. With a fixed rate credit card you know what the interest rate will be every month, whereas a card with a variable rate can fluctuate. Of course, even the interest of a fixed rate card can change based on certain events, such as paying your credit card bill late, exceeding your limit, or simply because the credit card issuer decides to change it after providing you ample advance notice.
Credit Limit - This is the amount of money the credit card company will let you charge to the card. This amount varies depending upon the card offer and your credit history. Be sure to get a credit card with an ample limit, because getting close to your max can hurt your credit score. Just remember that you don't have to max out your limit just because it's available.
Incentives - To compete for and to gain customers, many credit card companies offer rewards. Even if you normally use cash, why not use your credit card and then use the cash to make the payment during the grace period? You still won't pay interest and meanwhile you'll rack-up rewards. A credit card with 5% cashback will earn you $5 for every $100 charged. If your total bills come to $2,000 per month, you'll earn a free $100 every month. Look for a rewards program that you'll use and which offers flexibility, such as cashback or travel.
Fees and Penalties - Compare common charges such as late fees, overlimit fees, balance transfers, cash advances, and for making payments by telephone. Regarding balance transfers, look for credit card offers with no transaction fees and zero percent interest for at least 12 months.
Consumers are having enough problems keeping good credit scores without other factors causing scores to fall. For example, suppose you have good scores and then your account is closed through inactivity. Closed accounts can lower credit scores.
Banks and lenders use scores to determine how much they will loan and the percent of interest that will be charged. Companies are closing accounts of good paying customers and this could have a negative effect on the consumer's scores. Do consumers with good credit deserve to be treated this way?
Getting credit can be costly or more difficult with low scores. Consumers have no way of controlling credit card companies who close their accounts. Customer loyality may not matter to some companies with the economic problems of today.
Credit scoring may need to be over hauled due to the problems of the economy. Lenders may need new rules to follow concerning cutting credit limits and closing accounts. Low scores can mean less consumers seeking credit.
Credit scores have been used to predict the chances that borrower will repay a loan. Credit cards are more in demand than mortgage loans. Some consumers carry several credit cards and are good customers with good scores. Companies closing credit card accounts are making many good customers angry.
Interested home buyers are at risk for higher interest fees on a home loan caused by lower scores due to closed credit card accounts. This is just one more problem for consumers. It also creates a problem for lenders. They may not have as many customers who will qualify for a loan.
Credit scores use to be a good predictor. Now, credit scores may not be a good indicator. What worked in the past may not work now. Consumers don't want to pay high interest rates because of lower credit scores and they limit spending habits and lenders can not survive without customers.
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Credit Tip: Need a high limit for Christmas credit card charges? If you have bad credit, consider a personal loan by refinancing your mortgage. Even if you have cash to buy Christmas presents, we recommend using a prepaid card to make purchases because it's safer than carrying cash.
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