Effective debt management by choosing credit cards properly
Credit cards are indeed considered as one of the “miracles” in the financing industry it can also be considered as a “curse” when people who have availed of it are having debt management problems.
Many say that because of this plastic card, people are given better access to almost anything they need. From basic necessities like food, clothing, shelter, to almost all kinds of bills and obligations that people have to pay credit cards is a big help especially to a person’s better financial management. While it is true that credit cards bring so many advantages, people shouldn’t get too overwhelmed of the convenience it offers. While credit cards allow a person to use someone else’s for emergencies, it can also drown you into a pit of debt.
Which credit card is best for you?
There is no denying that a credit card is indeed an extremely and overwhelmingly useful and powerful financial tool if used properly. So, for you to use your card effectively without having to worry about debt management troubles that may come along the way, you must keep in mind the following considerations which can help you avoid debt management problems:
1. Proper identification of your credit need is a must. This is the first thing you must consider in choosing a credit card. Ask yourself why do you need it. Whether you need it for education, home improvement, and business or for purely for convenient purchasing need, you must have a specific target where you can use your credit card wisely. And since each and every one of them have their own strategies in luring you to choose their credit cards, you must clearly identify your priorities for a specific credit card.
2. Regardless of time constraint, conduct research, review and compare the credit cards available. This may seem very general and vague but this is the most basic thing one should do if he or she plans to apply for a credit card. You may research first what are the available credit cards out there. Today, there are actually hundreds of banks and other finance agencies that are offering credit cards and each of them has a lot to say about their product. By doing research through online and offline resources, you can learn more about credit card offers, and ratings. After doing extensive research on all of the cards, you may now review what they offer and start the “elimination process.”
3. Consider the credit card that can easily establish and strengthen contact with credit unions. As a credit card holder or a creditor, it is beneficial for you if you belong to a credit union. Being a non-profitable organization with a lower overhead, credit unions definitely offer numerous advantages like lower interest charge.
4. Opt for a credit card that has a low Annual Percentage Rate or APR. This refers to the measure of the cost of credit expressed as a yearly interest rate. To avoid debt management problems, it is a must that you check out the APR when availing of a credit card because this is the amount charged to you on monthly outstanding balances. Always remember the higher the rate, the higher the chances you will pay relatively high interest charges.
Since APR also concerns the periodic rate—the rate applied to your outstanding balance to figure out finance charges for each billing period—you must make sure that you choose a low APR credit card to avoid higher interest rates.
The author graduated with a BSc Hons in Mathematics from the University Of St. Andrews before moving to Heriot Watt University in Edinburgh where he attained an MSc in Applied Mathematics. The author is also an associate member of the Institute of Mathematics and its Applications. During his study and since leaving university the author has held a number of customer services and marketing roles within major retail organisations.Scott E McClelland MSc Applied Mathematics AMIMA.