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.
New Credit Card Rules now in effect. Apply online for a secured or unsecured credit card for bad credit or excellent credit. Review new rewards such as travel skymiles and cashback.
The newest changes that credit card holders will be seeing is a 45 day advance notice for any changes to their credit card contracts and bills must be sent 21 days before the payment is due. This could help consumers make payments on time and avoid late fees. All of this is from the President's goal to make changes by means of the Credit Card Reform Act. Before all these changes, issuers only needed to give 30 days notice before changing a contract and could mail bills about 14 days in advance.
Consumers can reject changes to their contracts like higher interest rates and they can choose to pay off their balance at existing rates within five years. These changes are suppose to protect consumers from abusive practices. More changes will come in February 2010 and snap into effect as credit card companies can't raise interest rates on existing balances unless the borrower is over 60 days late or the increase is stated in the contract. This puts a freeze on interest rates for money already borrowed and households budgets could get a break with this change.
Credit cards for young adults under 21 years of age will bring more changes in February. They must have a cosigner and will have restricted credit limits. Credit card issuers can't raise interest rates in the first year unless it is in the contract. Issuers must give advance notice before raising rates on future purchases.
Cosigners for a credit card will probably need good credit and they are just as responsible for the debt. In addition, both the cosigner and the primary card holder's credit reports will be affected whether negative or positive. A good rule of thumb is that you should not sign anything you may have to pay back. Cosigning should not be taken lightly as it is like letting the primary borrower use your credit history.If they are constantly late this has an affect on both of your credit reports. There are times when cosigning may seem necessary, it is best to consider all other available options first.
Consumers will be able to reject an interest rate increase and cancel their cards. Under the new rules, the cardholder will have five years to repay their balance at the current interest rate. That may create a higher minimum payment but the minimum balance can't go up more than double. If a balance is too large to be repaid within five years without more than doubling the minimum payment, the credit card company may have to give the consumer more time to repay or have a new rate. Anyone applying for a credit card should read the terms and conditions of the card way before racking up the debt. There are great credit cards available with low interest rates and benefits. Credit Cards when not abused by consumers, make life easier at times when something is needed but the cash is not within reach.
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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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