Credit cards - key factors to consider

Category: Credit cards
Date: 10/8/2008

Credit cards - key factors to consider

There are a number of things to consider when you're taking out credit cards. Here's the Moneyfacts.co.uk guide.

Do you need any more debt?

• Credit equals debt. As yourself whether you need any more. Make sure you're in control of the debt, and not the other way around.

What do you want the card for?

• Get a 0% balance transfer deal if you have existing credit cards which you are paying interest on. Each repayment you make during the 0% period is reducing the debt. Look up balance transfer Best buys for what's on offer.

• A retail purchases offer will allow you to shop free for a limited period. So if you're a big shopper, this could be for you. Take a look at retail purchases best buy credit cards for the best deals around.

• If you want to want a card for overseas usage, make sure you won't get charged a fee for each time you use it. Yes, we have foreign usage credit cards best buys too.

• If it's just for everyday spending, and you pay off the full balance each month, a cashback or rewards card might let you treat yourself. Or if you're feeling generous, how about a donation credit card to make a difference to your favourite charity?

How will you run your account?

• If you know you will always pay off your card amount each month, the interest rate doesn't matter to you. You may be more swayed by a rewards card or a cashback card so you can treat yourself or a donation card to do your bit for charity.

• Set up a direct debit which ensures you won't miss any payments. You can set up the direct debit to cover the minimum payment or your full amount.

• If you're likely to want cash from your credit card account, think about what the interest rate is for cash transactions. That cash could cost you a small fortune.

Big purchase coming up?

• If you've got a big purchase coming up, wait until after your statement date to maximise your interest free period. Better still, do it on a 0% retail purchases card.

• Beware of paying for a holiday on your credit card as you'll usually have to pay around 2.5% extra. This reimburses the holiday firm for the interchange fee that they miss out on. On the plus side, you might get some free holiday insurance from your credit card provider.

Annual percentage rate

• Sometimes it's not a direct comparison to just look at the APR for credit cards. Cards that have an annual fee have to factor this into their APR which makes the rate look greater than it really is. If you're after a card with great rewards, the fee that is charged may well still be good value.

What to do next

Now you're aware of all the considerations, take a look at the latest credit cards best buys to check the latest rates and deals on offer.