How to select a Credit Card

With hundreds of credit card companies flooding the markets with thousands of credit card, it is important to know which one is the most suitable credit card for you. Since each individual is different, so are their financial needs. Hence, the credit card which one should choose should be given a thorough consideration. For. e.g. a business executive who travels abroad frequently, should opt for a corporate credit card which allows him less charge for forex transactions on his credt card. On the other hand, a student who may not have a regular income, should opt for a credit card which is free of any annual fee and has a low interest rate.

Therefore, different cards will suit different people’s needs. The following will help guide you through the credit card application process and the things you should think about at each stage.

Before selecting a credit card, ask yourself the following important questions:

1. Do I really need a credit card? How much can I afford on it?

2. What do I want the credit card for?

• Just to pay for things and not for credit at all – I intend to pay off my balance in full every month
• To spread the cost of spending over a number of months
• To take advantage of special offers (e.g. lower rates for balance transfers)
• For emergencies – as a standby to give me easy access to credit if and when I need it
• To use for a specific purpose such as shopping on the Internet or overseas
• To support a charity or other organization

3. What credit card features are important to me? What information do I need to compare?
• The interest rates – for purchases, balance transfers, cash advances and credit card cheques
• The length of the interest free period for purchases
• Incentives and benefits such as cashback, rewards or loyalty points
• Being able to manage my account online
• Using my credit card when I am abroad

Once you know what kind of credit card you want and how you intend to use it:

4. Make a shortlist of credit cards
Once you know what you are looking for, talk to card companies, look online, look at the Summary Box for each credit card and make a ‘top five’ list of credit cards that are right for you.

5. Compare Credit cards
Get a copy of the Summary Box for the cards in your shortlist. Have a look at all the different features and decide what card is most suited to what you want it for.

6. Review the Terms and Conditions of the Credit Card
Make sure you have read, in full, the terms and conditions of the credit card that you decide to apply for. This is important to ensure that you fully understand your responsibilities and obligations.

7. Apply for a Credit card
You can apply for your card in person, on the phone, by post or online. Remember, you need to be completely truthful in your application. As part of the application you will sign to indicate your acceptance of the terms and conditions.

Related: Credit Card Safety Tips

8. The Credit card company’s decision
Your card company will always run some credit checks on you and look at your application form and any past payment behaviour before deciding if you are eligible for a credit card. If more than one interest rate is available for a credit card, the card company will decide on what rate and credit limit are appropriate, depending on what they think you can afford to pay back.

9. Receiving your Credit card
Some card companies may require you to activate your card before you can begin using it. If on receipt of your card you decide that it is not for you then you should immediately contact the card company and ask to cancel the agreement.

10. Tidy up loose ends
If you’re transferring a balance from another credit card or closing an old account remember to check that any regular or recurring payments have been cancelled or moved from your old credit card. Choose a PIN you can remember. If you don’t think you’ll be able to remember the PIN that is issued for your new card you can always change it at any cash machine to something more memorable.