Best Rates Not Always Best Deals

You are ready for another credit card for a specific purpose, for example, travel.  You have seen the ads for the best travel related cards, but you keep hearing that you have to get the best rates in order to make it worth obtaining and using the card.  Is this true?  What are your options?

Do not get the cart before the horse.  Yes, you want the best rates that you can possibly find in a card, but you also want to take advantage of other things that can help you as well.  Use these tips to help you choose the right card for you.

The big picture.  First, go back to your original need for the card.  If you need a card for travel related purposes, then it would be wise to look at a travel related credit card which will give you a rewards program from which you can earn airline miles or points and then redeem on more travel related expenses.  This is one of the best perks in the credit card industry.  If you know you can pay off the balance each and every month, you won’t be effected by the APR so it really shouldn’t matter.  That being the case, you should place the value of the rewards program above the interest rate.

Priorities.  What are your priorities for this card?  Will you be purchasing more travel related rewards?  Will you be paying off the balance every month with an expense check from the company for which you are employed?  How important is getting the best rates and savings on hotels, rental cars and other airline ticket to you?  Make a listing of the most important priorities and then number them by importance.

Benefits.  Now, look at the benefits and see if they work for you.  Are there limits on when you can redeem your miles / points?  Are you limited to certain companies and/or carriers on which you can use your rewards to purchase additional airline tickets?  Can you use your miles/points for other items?  Look at the details of the rewards program to make sure that it will serve your needs, and not the other way around.  The worst case scenario is to get a card that you cannot take advantage of the rewards, and then, on top of that, you have to pay high rates and fees.

Choose wisely.  Gather offers of the type of card that you are choosing as it relates to your needs.  Once you have a group of card offers that will give you similar benefits, compare the rates and fees among them in order to get the best interest rates and lowest fees.

Other considerations.  Can you perform a balance transfer and take advantage of a 0% term on money that you bring over from another card, or at least have a lower interest rate than on the other card?  What other unique privileges does the card you chose offer that other cards do not?  Can you pay off another card or two and just use this as your primary credit card?

These and other concerns make it mandatory that you think about this and weigh the benefits for a while before you jump in and get the first card that you think will meet your needs.  Having your eyes wide open going into this will help you avoid a mistake that you might find difficult to reverse later down the road.

Obtaining and using credit cards has its own pitfalls and issues to watch out for, but if you have a laser-like focus and purpose, you will be better equipped to handle what comes your way.  Be sure to keep impeccable records of items that you purchase with your card and closely guard it to help prevent from becoming a victim of theft or identity theft.

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This entry was posted on Thursday, April 23rd, 2009 at 6:34 am and is filed under Credit Card News, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.