7 Alternatives To Consider When Taking Out A New Credit Card

Some cards will charge interest immediately from the date of purchase and are therefore not suitable if you clear your balance each month.

3. The Annual Fee

Many cards have now implemented an annual fee. This fee is chargeable whether you clear the debt each month or if you roll over your debt.

4. 0% Balance Transfers

When taking out a new credit card you will normally have the option of transferring any outstanding balance to your new card with no interest charged for a specified period.

Although marketed as a "0% balance transfer" many are not totally free of charge. An increasing number now charge a one off charge of 2-3% of the amount transferred as an "administration chearge" for handling the transfer.

This is legally not an interest charge but it amounts to the same thing - you are charged a fee by your credit card company based on the amount transferred.

The availability of true 0% balance transfers is disappearing and in all likely hood will completely disappear sometime soon. If a 0% balance transfer is important to you take advantage soon, however be aware that many of these cards have higher subsequent interest rates.

5. The Availability Of Cashback

Many cards now offer cashback on purchases. This is usually is between 1/2 and 1% of new purchases (excluding balance transfers and cash withdrawal). If you do not repay your account in full each month take this into account when considering the interest rate chargeable.

It is only where you repay the card in full each month that this is a true cashback on purchases and if you do repay in full each month you may choose to make this a priority.

6. The Rewards And Discounts Offered With Your Credit Card

Rewards are where you can purchase goods or services at a discount by using your credit card, or you have free insurance on purchases made using your credit card.

In the credit card business nothing is free. If there are rewards offered the cost will be built in somewhere (usually a higher interest charge) so compare with other cards not offering the same rewards.

7. Credit Card Payment Insurance

Whether you take this option or not most cards now offer some sort of payment protection insurance in the event of sickness and disability. In the past this cover was limited to paying the minimum monthly payment however many cards now pay 10% of the balance on the card at the time your claim commences and may be worth considering.

Be very careful with this insurance as it will exclude any condition you suffer from when the cover commences and similarly any redundancy announced before the cover commences.

Taking out a new credit card is more complex than it seems at first. As you can see when considering a new credit card there are a number of aspects which must be taken into account and t can be very difficult choosing a new card.

There are many comparison services available that can help you cut through the confusion and I suggest you consult one or more before making your decision.

In all cases prioritise your requirements and only apply for the credit card which best matches your circumstances. Don't just pick the card with the longest balance transfer period or lowest interest rate as it may cost more in the longer term.

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