The best method to select a credit card

A smart way to obtain a credit card is to comparison shop as it can save you money. Shop for a card with a low annual fee, and a long grace period that gives you enough time to pay your bills and suits your payment habits. Also consider your spending behaviour and find a plan that is suitable to your spending needs. If necessary, phone card-issuing companies to verify information and inquire about any other credit card plans that may be available. Also check the following information about the credit card plans available to you:

1. Where is the card accepted? Do many merchants, including the ones you usually shop with, accept it? Is it internationally accepted?

2. What is the interest rate charged on the card? How is it calculated? 

3. What are the other fees and how are they charged?

4. How much is the annual fee?

5. How long is the grace period?

6. Is the card insured?If so, what does the insurance cover and how much does it cost?

7. What are the arrangements made by the card issuer in case the card is stolen or lost? What is the cardholders’ (your) responsibility to report the loss and what is your maximum liability?

8. Are there any benefits? (Frequent flyer miles, free car rental insurance, for example)

Compare card offers on interest rates and read the fine print carefully before deciding on a credit card.

EFFECTIVE CREDIT CARD USE:

• After receiving the card, sign immediately, memorise the PIN and destroy any documentation that can lead to fraudulent use.

• Enter your PIN carefully at an ATM and avoid leaving a receipt behind. Shred all evidence from card statements and receipts.

• Make sure the magnetic strip on the back of the card does not come into contact with other magnets as the information could be lost and a new card has to be issued. 

• Make sure your credit card bill is fully paid on time every month. If that is not possible, make at least the minimum payment to avoid having a bad credit rating and late payment fees.

• Preferably use the card in emergency cases when cash is not easily accessible. Consumers can easily accumulate a large amount of debt if they use credit frequently. Do not let your debt accumulate without the ability to repay it.

• Always bear in mind the need to protect the security of your credit card. Do not quote your credit card number to an unrecognised or doubtful merchant for product payments. You must be convinced that the merchant you are purchasing from is reliable and has a long history with dealing with credit card transactions. Also quoting your card number over a cordless or mobile phone should be avoided; hackers can have the ability to tap into radio frequencies and listen to conversations.

• Credit cards can be very useful financial tools and can make your life easier. However, they can easily lead a person heavily into debt and the interest rates they impose are very high. Used carefully and with self-discipline, they are an option to be considered. If you have difficulty meeting your monthly expenses already, a credit card is not for you.