Need a New Credit Card? Let the 3 P's be your Guide
You've decided you need a credit card but......
Are you buried under an avalanche of unsolicited postal
application forms? Are you blinded by the bewildering array of
advertisements in print media and on TV screens? Are you puzzled
by the plethora of promotional material from your bank, or other
companies you do business with?
When it comes to applying for a credit card, information
overload often prevents people from making a rational, informed
decision. The simple strategy suggested here will allow you to
quickly identify the pertinent information you need, narrow down
your choices, and make it easier to determine which card is the
best one for you.
Whether you are applying for your first credit card or are
adding to your portfolio of plastic, these guidelines will help
you focus. Used in conjunction with an online credit card
directory, the entire process of identifying and applying for a
credit card will be simplified and speeded up.
THE STRATEGY:
Firstly, learn the lingo - understand the terminology and
how each feature will contribute to your credit costs.
http://www.federalreserve.gov/pubs/SHOP/ is an excellent source
of detailed definitions.
Here are the main terms you need to understand in order to
compare credit card deals: A.P.R - annual percentage rate
of interest. Rates can be tiered, fixed or variable. Different
rates can apply to outstanding purchase balances, cash advances,
and balance transfers.
Introductory A.P.R.- a reduced rate for a set time period
(this varies), after which it reverts to the main A.P.R.
Fees - some are waived and others are charged at a flat
rate or as a percentage of the outstanding amount. Fees can be
charged for card usage (on an annual basis or monthly), for
account set-up, balance transfers, late payments, cash advances,
exceeding or increasing your credit limit, and other sundry
items.
Grace Period: the time period (10-28 days) that you have
to pay your bill without incurring a late fee.
Next, you need to identify your three P's in order of
importance: Profile, Priorities and Preferences.
Credit cards, like people, are not created equal - the best
option for you will not be the best option for everyone. The
card your friend recommends or the one your bank promotes may
not best suit your personal set of circumstances.
Your PROFILE:
a) Do you have no credit history, a bad credit rating, or are
re-establishing your status? If so, you should immediately zero
in on specialised options such as secured credit cards,
unsecured limited-credit cards, and loadable debit cards.
b) Do you fall into a targeted category such as student or
business? If so, concentrate on these tailor-made options.
c) Do you always clear your monthly balance? If so, cards which
have no annual fee or offer special features, such as cash back
or frequent flyer points, would be more appropriate than those
with low A.P.R.s because no interest charges are incurred when
the balance is paid in full.
d) Do you carry your balance over each month? If so, then cards
offering a low A.P.R would be the best choice - the lower the
A.P.R., the lower your interest charges.
Your PRIORITIES:
Having used your profile to highlight your main options, you
should now determine which card features are most important to
you and rank them. You may wish to support a charity or need to
accumulate frequent flyer points, or you might travel widely and
must ensure that you are able to use your card in as many
countries as possible. Where credit cards are equal on, for
example A.P.R. in your profile, use your priority list to
distinguish your most appropriate options.
Your PREFERENCES:
Having narrowed the field of credit card possibilities by
matching options with your profile and priorities, you can now
fine-tune your search by applying your preferences. The main
work has already been done, so at this final stage you can allow
yourself to be more frivolous or eccentric - exercise your
personal preferences. You may feel a certain loyalty towards one
particular type of card, want free gifts, or simply dislike
another card's colour or design - it's your prerogative.
Finally, armed with the 3 P's strategy, you can now visit
an online credit card directory and complete the comparison,
selection and application procedures. Not all directories are
created equal, but a good example is
http://www.globalcreditcardindex.com . This well-designed
website is informative, user-friendly, and allows you to search
the comprehensive data base and compare options with your 3 P's
strategy in mind (currently only American cards are included but
UK options will be added soon). Online applications for all the
cards listed can be submitted directly from this website, but
approval times will vary depending on your personal credit
history and the type of card chosen.