If you like to travel, you probably know the value of carrying a credit card. As well as being a convenient alternative to carrying wads of cash, credit cards can be much safer. Chip and PIN payments add an extra level of security and you will usually be covered against fraudulent use of a lost or stolen card as long as you take reasonable precautions and report the loss as soon as possible.
There’s no such thing as a perfect, ‘one-size-fits-all’ credit card. When it comes to choosing which credit card to apply for, the right one will depend on your own personal circumstances and requirements.
Low rate cards
One of the most important deciding factors will be how you manage your payments. Credit cards usually have an interest free period for purchases. If you pay off the whole of your credit card balance by a given date (this will be shown on your statement), you will not be charged any interest that month.
If you tend to have an outstanding balance some or most months, then it makes sense to go for the card with the lowest standard rate. Other factors might come into play however, such as the maximum limit you are offered on a particular card.
A far more effective way to use credit cards is to make sure you pay the balance in full every month. This way, you will not be charged interest for using your card and can look at other factors, such as cards that offer cash back, air miles or other rewards.
Basically, these work by giving you reward points that you build up proportionate to the amount you spend on your card. You will earn rewards both at home and abroad so by choosing the best air miles credit card, you can work towards your next trip even while you’re enjoying your current one.
Some cards offer a 0% promotional offer on balance transfers, purchases or sometimes both. Promotional balance transfer rates can be useful if you already owe money on existing credit cards as you can transfer the money you owe to your new card at a 0% interest rate.
There will be a fee for doing so though – usually around 3% of the balance transferred. You should also be aware that promotional offers only last for a given period of time.
If you have not paid off your balance by the end of this time, the interest payable on any remaining balance will revert to the card’s standard rate.