Choosing a credit card used to be simple, with basic categories such as cash back and reward points. However, today you get to choose from a myriad of cards from travel cards to petrol cards.
This makes choosing the best card to suit one’s lifestyle more complicated than it’s ever been. Even if you have found the right card for you, sometimes you can outgrow your card. For example, if you used to have a credit card that’s perfect for entertainment expenses, but as you get older and have your own family, your needs may have changed, and your entertainment credit card really doesn’t match your new spending habits.
To find out if you still have the right card in your wallet, ask yourself these questions.
By identifying certain things in your lifestyle, your quest for the right card can become much simpler:
Why do you need a card?
There are a few things you need to consider before you begin your credit card selection process. If you are getting your first card, you may want to check out the entry-level credit cards that offer some good deals, but at the same time has low requirements for the applicants.
However, for those who have a specific spending type they would like to make on the card, such as travel or petrol, it pays to check out the credit cards that fall into those categories, and compare the features and privileges offered by different banks.
Your needs should come before everything else when you are considering a credit card application. By getting the wrong card which just offers attractive sign-up promotion may not be the wisest decision. Don’t be lured by what seems to be attractive sign-up gifts, but stay focus on the task at hand — which is to choose a card that offers long-term privileges and benefits for you.
What do you spend on the most?
Getting 20,000 mile points upon sign up sounds like a sweet, sweet deal, but if you are not a frequent traveller, it will probably mean as much to you as Monopoly money. A deal is only good if it matches your spending habits and lifestyle.
There are various categories available for you to choose from when you are picking your plastic. From dining and travel, to online spending and retail. Within those categories, you can choose whether to get one that is catered for female, like the UOB Lady’s Classic, Platinum and Solitaire Cards.
Before you even begin to check out the cards in the market, ask yourself: What do I spend on the most? You can check which category that you spend on the most here.
Once you have the answer to that, you won’t be easily swayed by other cards that may not be too relevant to your quest.
Managing the four-letter word
“Debt” is probably the worst four-letter word in personal finance, and far too many people have it hanging over their heads.
To make matters worse, according to Nielson Global Survey of Investment Attitudes 2012 on Asian countries, Malaysia ranks low when it comes to paying outstanding credit card balances in full — below Indonesia, Singapore, South Korea, Japan and Taiwan.
That is worrying. Although the credit card is often viewed as one of the culprits for the increasing household debt in Malaysia, it can also help one manage his or her debt better.
If you have an outstanding credit card debt, you can transfer it to a card that offers low balance transfer rate for a certain period. If this is the case, it will affect how you choose your new plastic.
Identify how much you need to transfer, and what is the fastest period you can finish paying off the debt. Be realistic and don’t overcommit. There are many cards that offer 0% balance transfer rate for six months, but if you are unable to pay off within the period, you may incur more interest compared to choosing one with 2.99% for 12 months.
Cards that offer attractive balance transfer rates can also match your spending habits. It is just an extra factor you need to consider when choosing a new card.
Find out how much you can save with balance transfer.
Applying for a credit card is easy if you have a good, stable income and appealing credit score. However, choosing one that fits your lifestyle is not as easy as it seems. Understanding the pain most consumers have to go through, iMoney breaks it down with a simple quiz that will deliver the best cards based on your spending habit.
A credit card can be a useful tool to pave your way to a good credit history. If you play your cards right, you’ll prove to creditors that you deserve a home, car and even business loan. Getting the right card, and using it wisely is definitely a step in the right direction!