Responsible Personal Finance – Three Major Factors to Consider before Getting a Credit Card

Responsible Personal Finance Three Major Factors to Consider before Getting a Credit Card

This is a time when credit cards have become an integral part of every person's life. The majority of the population seldom brings cash anymore. However, a lot of these people get shocked as soon as they discover that they got more than what they bargained for, so here are the three most important factors to check before you sign up for a new credit card.

The first factor to consider is the APR or the annual percentage rate. This is essentially the interest charged on whatever purchases you made through the use of the card. Typically, credit cards have a grace period of about one month before they start charging interest. However, if you cannot pay the card's balance within the grace period, then aim for the lowest card APR that you can get. APR's range from around 5 percent to 39.99 percent, depending on the country you're at.

The second factor to consider is the credit limit. This denotes the maximum balance that the card can hold. For example, a credit line of five thousand dollars means that your total unpaid transactions should be within that amount. This would not have been much of an issue, except that when you try to charge more than what your credit line offers, you get penalized by the credit card company for overdraft fees, which are often quite hefty.

The third factor to consider is the maintenance cost. Most credit cards charge an annual fee for the use of the card. The rates vary, and they almost always are stated only in the fine print part of your card's contract. Be sure that the fees are something that you are okay with. Like any other legal document, those printed in large characters are just literally fluff and those that hard to read are the ones that really matter.

Getting credit cards makes purchases easier and safer, if done right. Make sure to check these three things, so you know where you're at.

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