Choosing a Credit Card

All of us know that there is a huge and severe competition today among credit card companies. For some reasons it’s good - you can choose what is more suitable for you, on the other hand it’s bad because you face with problems of choosing “which one is better?” and it can totally confuse you. Do not be confused in this article we will discuss how to compare and choose a credit card.

If you have a good credit history, you have a chance to pick any card from many different companies (banks). There are different types of credit cards. It can be credit cards that give you cash back, gift cards or bonuses (it also calls frequent-flier miles). The best way of getting a good card is picking the card which excellent matches your spending style and your needs.

As there are different types of credit cards, first of all you need to choose one among standard credit cards, premium, charged credit cards, business credit cards, student or reward cards and etc. Then choose the best possible rate, it depends on how are you going to use the credit card. If you usually pay your balance in full each month then charging card is excellent for you. If you are going to use card for balance transfers, then you should get a card with a low interest rate on balance transfers. For frequent travelers, for instance, a card that provides frequent-flier miles or points is the best kind. In this case it’s good to look for a card that pays a high percentage on travel expenses such as travel airline tickets or hotel rooms.

Be acquainted with the annual percentage rate (APR). Most credit cards have a different APR for balance transfers, purchases or for cash withdrawal. Make sure you know the APR for each. Also you need to know all fees which will be charged at ATMs, stores or when you carry out belated card payment.

Choosing a credit card you need to understand that it’s not a one-time bonus, but a long-term source of getting money when you urgently need it. That’s why when you pick a credit card for you don't choose a card just because it offers a signup bonus or because it gives you a discount at your favorite store. You need to focus on terms and conditions of the card. There are 2 world leading payment systems Visa and MasterCard (we will take it as the example). It’s hard not to mention that cards of these systems are acceptable all over the world. It is difficult to find payment terminal where Visa is maintained and MasterCard is not or vice versa. It’s difficult to say which is better. In case you want to pay with your card overseas, there are some differences about which you should know and you decide by yourself which is most suitable for you.

Probably you’ve heard many times the frequent assertion that “Visa is American payment system and MasterCard - European.” It’s totally not true. We can mention it even while comparing payment system’s names - VISA International Service Association and MasterCard Worldwide. The very important thing is the next one. Basic currency for payment system Visa is US dollar, which means that all operations connected with conversion will be occurred with USD. Basic currency for MasterCard payment system either USD or EUR, consequently all operations connected with conversion can be occurred with USD or EUR. That’s actually a difference between these payment systems.

Banks entering into an agreement with payment systems usually open one or few correspondent accounts. Often banks open USD account for mutual settlements with Visa and EUR account for operations with MasterCard.

The conversion will occur in case currency with which you want to pay is different from the currency your card account is opened. When you pay overseas, part of conversion is carried out according to the rate of payment system and part of it according to the rate of your bank. Moreover conversion often happens between more than 2 currencies. For example, you have a Visa card, account opened in JPY (yen). You want to pay with this card at the restaurant in France. Conversion will be performed this way JPY-USD-EUR. Situation is the same if you have MasterCard account opened in JPY (yen). Conversion will be occurred this way JPY-EUR. So you can mention that in the second case there is less conversion. So to avoid double or more conversion, use different card for different counties. For instance, in Europe, Cuba, Africa (not everywhere) preferable to use MasterCard, in USA, Canada, Latin America, Australia - Visa.

A credit card enables you to purchase immediately, without the money being taken out of your bank account. It is impossible to refuse such convenience even if we know that we actually “borrowing” money. Simply just be attentive when you are choosing a credit card, read all information about fees, grace periods and other details.

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