Is Credit Card APR All That Counts
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Is Credit Card APR All That Matters?
Overview
Choosing the right credit card involves more than just picking the one with the lowest APR. It's crucial to match the card to your spending habits to avoid costly mistakes. So, how do you choose the right card?
Considerations Beyond APR
Not all credit cards are the same. Each offers different benefits, features, and fees. Selecting a card goes beyond just the advertised rate?"it hinges on how you plan to use the card.
Paying Off Your Balance Monthly
If you typically pay off your balance in full each month, the interest rate may not be your main concern since you won’t incur interest charges. Instead, focus on finding a card with a lengthy grace period?"ideally 50-60 days?"before interest kicks in. A card that offers cashback or rewards for purchases can also be advantageous, allowing you to profit as long as you don’t carry a balance.
Using the Card for Short-Term Borrowing
If you tend to use your card for short-term borrowing and pay off larger purchases over a few months, then seeking a card with a low interest rate is wise. While cashback options might seem appealing for larger purchases, they seldom outweigh higher interest rates.
Financing a Large Purchase
For those planning a sizeable purchase to be paid off over a year or so, look for cards offering a 0% introductory deal on purchases. These deals can last up to 12 months, allowing you to clear the balance without incurring interest.
Long-Term Balance Transfer
If you’re considering a balance transfer for longer-term borrowing, you have two main options: a 0% introductory deal or a low, long-term fixed rate. If you plan to pay off the balance soon, a 0% introductory period is beneficial. However, for longer repayment periods, a low, fixed-rate transfer card can be advantageous, often offering lower rates than personal loans without the need to find a new card post-introductory period.
Mixed Usage
Many people use their cards in varied ways, making the choice more complex. A card with a low balance transfer rate may charge higher rates for purchases, while a card with a low standard rate might impose steep fees on cash withdrawals.
A New Option
Fortunately, a new type of card offering a flat rate for all transactions?"including balance transfers, purchases, and even cash withdrawals?"is becoming more prevalent. These cards often feature a competitive low rate since they forgo introductory offers and rewards, making them an excellent choice for the average user.
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Selecting a credit card involves more than just hunting for the lowest APR. By aligning the card's features with how you spend, you can select a card that truly benefits your financial habits.
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