Choosing a Good Credit Card.

By B. Krishnamurthy

How often do you check you credit score? The better your credit score, the better are the chances for you to get a good credit card. Infact the two are inter-releated. You establish credit history with a credit card and once you establish a good credit history you will find credit card offers pouring in. Ever wondered why you are getting all those telemarketer's calls?

Every time you apply for a credit card, the company checks your credit score. The more cards you apply for, the lower your credit score. This is because it will appear as though you are scrambling to open new lines of credit which can be a sign that you are struggling financially.

You can avoid spoiling your credit score by choosing your card wisely. Choosing a card that matches your lifestyle and works for you instead of against you is very important.

Here are some tips:

If you plan to pay off your balance each month, choose a charge card instead of a credit card. Many companies offer charge cards with flexible spending programs that are perfect for people who plan to pay off their balance each month. In addition, most of the cards offer you reward points for using the card. On the flipside, an annual membership fee will be charged for having the card and there is a hefty charge if you don't pay off the entire balance in a given period.

A check guarantee card is another kind of card that ensures that the check you write will be honored upto to certain limit agreed mutually between you and the company that offered the card.

A debit card is issued by your bank and whatever you spend is deducted from your bank account, usually your checking account.

A credit card has a lot advantages. The major advantage being you don't need to carry huge amounts of cash around and risk losing it. With a credit card you can make purchases abroad without having to worry about local currency. There will be a charge involved, so be careful.

Thing to consider when you choose a credit card:

The first and foremost is the APR or Annual Percentage Rate. This is the rate of interest that you will pay on any outstanding balance. You may want to choose a card that the lowest APR for purchases and balance transfer, in case you need to transfer balance from another card. While transferring balances, you may want to make sure there isn't any balance transfer fees involved.

Some cards offer special introductory rates and interest free periods. If this is the case, you have to make sure that the rates are affordable after the end of the introductory and interest free period.

If you are a person like me who travels quite a lot, then you may want a card that offers you rewards, which can either be miles on your favourite airline or you can get cashback for every transaction you charge on the card.

Other things to consider are the annual fees, late payment fees and minimum repayment and the charges for exceeding your limit.