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How to choose the right credit card

With many of us relying on credit to get through the month, it is increasingly important to choose the right credit card. This involves more than just checking the interest rates and charges. Look for the additional extras that some cards can offer and the savings that can be made by using the right card.

Play your cards right

In order to choose the right credit card, you need to do a little research. Check every aspect of a credit agreement, and look out for hidden extras.

  • Snap up the free gifts. When you sign up for a new card, many providers offer gifts, bonuses and discounts on travel tickets. Take advantage of these offers, but pay your balance off in full so that you pay nothing for the rewards.
  • Look for cards that offer extra warranty on purchases. This can save you buying extended warranties for cameras, laptops and similar expensive but fragile items.
  • If you use your card abroad, look for credit cards that do not charge commission on foreign currency exchanges. The Halifax Clarity card, for example, offers reasonable exchange rates and no commission.
  • Look for a card that offers identity fraud protection. Identity theft is an increasingly significant issue, and, if you choose the right credit card, you are protected from loss. Capital One credit cards offer ID protection and other providers are considering this as an extra.
  • Take advantage of cashback offers. Some cards will offer up to 5% cash for all purchases in the first 3 months. If you are buying large items this can add up to a useful sum.

Don't pay interest

Even if you know how to choose the right credit card, it's important to remember that interest rates are prohibitive. The most efficient way to use a credit card is to set up a direct debit to pay the whole balance automatically every month. In this way, your credit is always free of charge.

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