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How to choose a Credit Card

how to choose a credit card imageChoosing a credit card can seem like a tricky thing to do, but with a little bit of information, you can make a confident decision. It seems like there’s a lot of things to take into account - credit limits, interest rates, annual fees, interest-free periods, payment schemes, and spending rewards. It can all look a bit complicated. However, things aren’t quite as difficult as they seem. 

A credit card can be a really great option for many people since it can give you a lot of spending flexibility. At the same time, you’ve got to be sure that you’re in a position to be able to make the repayments on the credit you use. Your ability to make repayments will depend on your own personal financial circumstances, but it’s also really important to make sure you choose a credit card that matches up well with those circumstances. That means considering things like your income, your spending habits, your budgeting goals, and how regularly you’re likely to be able to make repayments.

The most important thing to remember is that choosing the right credit card means choosing the right credit card for you - it all depends on your personal circumstances and what benefits and conditions you are looking to get out of your credit account.

This article gives you the essential information you need to know about the things to take into account when choosing a credit card so that you end up with the best credit card that suits your needs.

Should I Get a Credit Card?

Before working out what kind of credit card is best for you, you first need to ask yourself this question - should I get one? It’s important to make sure that you’re in the right position to be getting a credit card, and that you’re not putting yourself in a situation where you’re going to be financially vulnerable.

A credit card works by giving you a supply of money that you can spend however you want, on the condition that you make a minimum repayment on the amount you spend each month. If you make the repayments on your credit card by the right time each month, and your interest-free period is valid, then you don’t get charged any interest. But if you aren’t able to pay the money back in the agreed-upon time, then you start to owe interest on the outstanding credit you’ve drawn.

That means that you need to have a reliable source of income or savings to pay off the credit card debt before you start paying interest. If, for example, you work intermittently and don’t have regular income, a credit card might not be ideal.

But, on the other hand, if you’ve got a steady income that you can rely on to make the repayments, then a credit card can be a really good option to give you greater spending flexibility.

If you think you’re in a position to be able to make the repayments on the credit you take out, a credit card could be great for you. Of course, there are a few different things that you then need to consider in choosing the right credit card for your situation. So read on to find out the essential information you need to get the right credit card.

Essential Information - Credit Cards

Credit Limit

Different credit cards come with different credit limits. A credit limit is the maximum amount of money that you can spend on your credit card without making a repayment.

A higher credit limit gives you more flexibility to spend more money, so it’s really good if you have high expenses. But it also means that you will have more money to repay if you do use it a lot. You need a reliable income to make sure you can make the repayments on time to avoid penalties. When you apply for a credit card, you and the bank will agree to a credit limit that is appropriate for your situation.

A credit card with a lower limit is probably a better option if you don’t have enough available cash or income to make large repayments. It can make budgeting easier because you can set a limit for your spending and stick to it.

Greater Bank allows you to easily apply to change the credit limit on your credit card via internet and mobile banking. So, if your situation changes, or you realise your current credit limit is not right for you, you can take the right steps to sort it out.

Payment Scheme

A credit card payment scheme refers to the structures in place to regulate how you use your card. The Greater Bank Visa Credit Card is accepted worldwide because it operates on the Visa network. You can also use your card with Apple Pay, Google Pay, Visa paywave, Visa Checkout, BPAY, and Visa Offers.

Interest Rates

Different credit cards come with different interest rates, and these rates will vary as market interest rates rise and fall. The interest rate applies to money that you haven’t repaid by the end of the repayment period. The interest rate is given as an annual interest rate, but it applies each day overdue credit is not repaid.

Greater Bank currently offers lower interest rates. However, you can get up to 55 days interest-free on any purchases you make on your credit card if you pay the full balance on your statement each month.

With a Greater Bank Visa Credit Card, the same low rate applies to purchases, cash advances, and balance transfers. That’s the big difference between the Greater Bank Visa Credit Card and other credit cards - usually, banks will charge much higher interest rates on cash advances and balance transfers. A cash advance is when you take money out of an ATM using your credit card, so being able to get cash in your hand at a lower interest rate can be useful. A balance transfer is when you transfer outstanding debt from one credit card to another. Subject to approval, you can transfer debt from another credit card to your Greater Bank Visa Credit Card and still pay the same lower interest rate on your outstanding balance.

Annual Fee

Credit cards usually come with an annual fee, and the amount will vary depending on the bank. The amount can range from $0 all the way up to $500 or more. When you look at a no-annual-fee credit card, though, you need to be careful you’re not trading off the annual fee for a really high interest rate (often around 20%).

Greater Bank has simplified things for you, offering an annual fee of $49, while also offering a lower interest rate. There’s no trade-off. Best of all, there is no fee at all if you spend a minimum of $12,000 each year after the first year of having your card.

Spending Habits

Your spending habits are important for the kind of credit card you need. The main things you need to consider are size and frequency.

Some people will spend approximately the same amount every month of the year, whereas other people might make large payments every other month or three times a year, for example. You’ll need a credit limit that covers the expenses you’re likely to make, even if you don’t use it month in and month out.

If you have fairly regular spending habits, it’s probably pretty easy to set a credit limit that gives you what you’re looking for. If you’ve set yourself a budgeting goal, then setting a credit limit can be a really good way to make sure your spending habits are in order. You want to make sure your credit limit matches your ability to make payments - so if your spending habits tend to get a bit wild, it’s probably a good idea to lower your credit limit. 

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If you have uneven month to month spending habits - maybe you need to make quarterly payments on school fees, for example - you’ll need a credit limit that gives you the flexibility to make those big payments.

What Credit Card is Best for Me?

The main things you need to consider when choosing the best card for you is the credit limit and the interest rate - these are the two most important things that will affect the value of the account and its appropriateness for your own circumstances. Most of all, you need to consider your own personal situation. You’ll want to make sure your credit card matches your ability to make repayments through your income, and that it gives you the flexibility you need for your spending habits (as well as the limitations you need for your budgeting goals).

So, here are 5 questions to help guide you:

  1. How much credit can I afford to draw on, based on my income?
  2. Is my income likely to change?
  3. What are my spending habits?
  4. What are my budgeting goals?
  5. What credit limit do I need?

Greater Bank has made choosing a credit card really simple. We offer the Greater Bank Visa Credit Card, which comes with a lower interest rate. You can change your credit limit on your account really easily as well - which is the main thing you will have to think about when taking out the credit card. The good thing is that you can talk to us at Greater Bank and get advice on what the best credit limit is for you and your needs. But have a think about the size of your income, your spending habits, and what sort of budgeting you’d ideally like to implement in your life.

Other than that, it’s pretty simple. On top of the lower interest rate and annual fee, a Greater Bank Visa Credit Card gives you access to your money that is convenient and secure.

Once you’ve worked out what the best credit limit is for you, you’ll then need to supply a few things to the bank, just so that they know everything is in order. You’ll need to let them know:

  • How much your current income is
  • Who your employer is (and their contact details)
  • Any other loan repayments (or other kinds of payments) you are required to make
  • An estimate of your average monthly living expenses

If you have these things handy, it will make it really easy to sort out a credit card for you and to determine a good credit limit for your needs.

Summing Up

A credit card can be a really useful and rewarding thing to have. It can give you a lot of flexibility to meet your expenses. But it’s very important that you get the right credit card for you - one that matches your own personal situation and needs. That means working out how much money you’ve got coming in, how much you usually spend, and how much you want to save. Once you’ve worked those things out, you can get a great value credit card that allows you to maximise on your benefits and rewards, while avoiding unnecessary interest.

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