Credit cards are what people use to either buy items they cannot currently afford, or benefit from the advantaged of using a credit card. People borrow money on a card as and when they need it, increasing the amount of debt they are in. Because it is so convenient, and the lending firm has no security on the loan, borrowing on a credit card is often an expensive way of borrowing money.
Unless you are paying off the full balance each month, each purchase you make on your credit card is costing you more than if you had paid in cash, or used a debit card. And if you can’t afford to pay for it at its purchase price, you certainly don’t want to be paying even more for it!
Customers are often tempted into taking out a credit card by the 0% offer which normally lasts a few months. The companies are hoping that you will spend using your credit card in the first 0% months, and then forget, or not bother paying off the balance so that they can charge high rates of interest on the borrowing. An even worse type of credit card is the ‘store card’ – a credit card offered by a particular store for purchases in the store. The high interest rates on standard credit cards are often made to look low by the enormous rates charged on some store cards. These are a really bad way of borrowing money, avoid these like the plague.
So if you really do want a credit card, or you are transferring debts to a new 0% card, what should you look for in a credit card. The first thing you should ask yourself is, ‘Am I really going to pay off the full balance every month?‘. If you are then, the interest rate charged on the card isn’t too big a factor for you. You should look at the other benefits the card offers, such as any free insurance deals or cash back on purchases. If you don’t think that you will be paying off the full balance each month, then it is likely that the most important factor is going to be the interest rate charged on your debt. Try to get a good length 0% period, followed by a low interest rate – and remember to always compare the ‘APR’ interest rate, interest rates expressed any other way can be very misleading.