As at present, there is a wide range of cards – American Express, Visa, Mastercard, JCB, and Discover, and possibly, many more that you may not be conversant with – but how does one differ from another? Is there one that is superior to the rest? The idea here is to ensure that you are applying for a card that befits your banking needs and nothing more.
To answer the above questions, you need to understand that no card is better than another; it all depends on several factors, particularly your preferred application. The difference existing between these credit cards is broad. Below are some of the tips to consider when applying for your ideal credit card.
The available payment networks & related banks
Let’s begin with MasterCard and Visa. These are not responsible for your cards. They do not give out money to their customers. In the real sense, these types of credit card provider – and the loan itself – is given by a particular bank, any financial institution or credit union, referred to as issuer. Every issuer sets special conditions for the credit card, including interest rate, implying that you have the option of obtaining more than one Visa or MasterCard from various issuers with considerably varied terms.
In this case, the issuing company stands out as the most hit stakeholder in case you default payment of your credit card. MasterCard and Visa are referred to as payment networks. These are primarily computer systems tasked with credit card business processing. Being a cardholder, it is unlikely you will notice any difference concerning them. Both of them come with a range of benefits. For example, they are responsible for the limited liability caps if a credit card gets lost or missing and the capacity of charging back dented goods. Most business owners embrace both types of credit cards for trade. Both of them attest to the fact that they are acceptable in over 150 countries by over 20 million dealers.
As it were, there is some difference when it comes to Discover. Cards offered by Discover are not very popular compared to the ones bearing the MasterCard or Visa logos. Besides, it offers its cards via Discover Bank alongside other different issuing banks. These types of cards gained their recognition by providing incentives to their cardholders, calculated as a discount on their procurement.
This type is a bit strange. The responsible company gained popularity as a unique lender for specific clients instead of the common man. Initially, the company used to offer its entire cards charging extremely high annual rates and barely dealt with charge cards – whose accounts required full repayment at the end of each month. Things have changed over time, nevertheless.
Currently, the company still owns a reimbursement network, offers cards, and is more popular in terms of being the most high-end compared to Discover, Visa or MasterCard. However, it has started forming partnerships with other related banks as well. Additionally, it, at present, provides cards, which enable their cardholders to accept a balance together with their charge cards.
What matters most?
Having looked at the details of each card, it is high time we delved deep into the actual meaning of these rather important cards. Try asking yourself the following questions and apply the solutions to find your most suitable cards:
Do I have the ability to bear a balance?
In case you are planning to bear a given balance, the cards’ interest rate is critically important, and you will wish for the lowest charge possible on your cards. Regardless of whether you are planning to settle your balance entirely every month, one thing you should remember is that times may come when you won’t be able to pay.
What is the interest or APR rate?
Various cards draw their customers in by sighting low initial APRs, which usually escalate immediately after inception. You also need to note that, currently, issuers are searching for any probable reason to increase their rates. What does this imply? The point here is that if you default payment, or delay your payments, chances are that they will escalate their rates significantly since the funders will consider you as being dangerous. This can also occur in case you skip payments on your car loan or mortgage.
The habit of one particular lender increasing their interest rates or charges for a blunder you make when dealing with credit from another creditor is referred to as universal default. No wonder, the practice has, so far, been proscribed by the latest reforms on credit cards. These rules took effect from the 2010 summer season.
Grace period – what is it?
This refers to the time given for you to service your loan in full before the commencement of interest levies. When the waiting period is long, then you are lucky, and you should capitalize on this rare chance to fully service your loan
Does an annual charge apply?
There those cards that include annual charges. Reward cards are known to bear the highest annual charges, considering that they fetch you something in return.
What other charges should I expect?
In most cases, there is always a penalty for delayed payments, spending more than what is in the initial agreement, and other many related issues.
Spending limit – what is it?
There are those cards that will offer you a spending limit of $500, while others are most willing to settle for a $2,000 limit. While you may view the higher limit as the best, you may be enticed to spend above your ability in case of more credit card availability.
Are their incentives offered by the card?
Most cards allow their clients to generate points that may be redeemed for their air travel. Others have partnered with dealers and provide incentives to a certain store. It is, therefore, important to know what the reward limits are and their exclusions before picking cards for the attached reward.
That said and done, it is now upon you to carefully scrutinize through some of these cards and see which ones befit your needs. The advice here is that you must be very careful in your choice and also practice a lot of wisdom with your very first card to help you establish a constructive credit record.