Posted on December 6th, 2011 by admin in Uncategorized

One Card Too Many

Gone are the days when credit cards were only for the higher income group. In a recent study, most people will apply for a credit card as soon as they get their first employment. Many people are attracted to the convenience offered by the credit card such as Internet booking, shopping and paying utility bills. Before succumbing to the convenience of the credit card, do some research and comparison. Always keep in mind that owning a credit card takes a lot of responsibility or it becomes the easiest way to be in debt.

When comparing two credit card companies, the most important would be the interest rates. Always go with the company with the lower interest rate. Many people have developed the habit of paying only the minimum amount and the balance will be carried forward with an interest. If the balance is $1000, a 10% interest will cost you $100 and a 13% interest at $130. The $30 may not seem like a lot but as it accumulates, it will take you years just to pay off the interest alone.

Many people have one too many credit cards. And many apply for more credit card as they are attracted to the low promotional or introductory interest rate or the balance transfer service. Check the rates that will apply after the introductory period and make sure you understand the terms and conditions. It is also important to compare the rate of the annual fees. Some companies waive the annual fees for a few years to attract clients but become costly after the ‘free’ period.

Many are also attracted by the cash rebates, rewards and point collection system. With cash rebate, make sure it makes sense to you and do some calculation. If the cash rebate is 1% on a $1000 your rebate is $10. The interest will cost a lot more than your rebate.Always check if the rebate is absolutely necessary and suitable to your lifestyle. Do not sign up for a new card simply because it offers you a rebate that would not make any significant savings on your credit card repayment.