Selecting the Most Attractive Credit Cards
The credit card has been actively promoted for the last decade and more. Promotions for credit cards have become commonplace all across Asia, from aggressive telemarketing to classy freebies being thrown at the prospective customer.
If you're a user in Asia, here are some tips you can take advantage of to make the most of your credit card experience. If you are not in Asia, perhaps there are some similarities in the use and administration of the cards business that will provide some insights into how to maximize your card usage.
When shopping for a card, there are several things you should look out for; the cost, the interest rate and the rewards, amongst others. The cost of the card refers to the annual fee or membership fee for the use of the card. Membership fees differ depending on the type of card applied for, ranging from the ordinary blue, green or silver cards, to more expensive gold and platinum cards. The difference is that more expensive cards come with more privileges, such as concierge services and priority golf for platinum cards.
In Asia, most banks and card companies give out cards for free for the first year, or even up to three years. If you would like to minimize the costs associated with the usage of a credit card, select one with a longer fee-free period. Otherwise, try out the more expensive cards and feel free to cancel the card after the fee-free period is over.
Interest rates on card unpaid balances do not differ much amongst different cards available today, generally ranging from 18% to 24% per annum. This refers to the interest you will have to pay if you do not pay your outstanding balances in full by the payment due date. Tied in with this is what is referred to as the interest-free period, the time between the purchase date and the date payment is due. For most card companies, the maximum interest free period ranges from 45 to 60 days, so you could buy something in the middle of June and not have to pay for the purchase till the end of July, interest free.
One thing to bear in mind is that if you roll over your balances, that is, if you do not make payments in full, the interest free period will no longer apply to subsequent purchases until the payment is made in full. From the example above, if you did not make full payment at the end of July, even purchases made at the early part of July would accrue interest at the stated rate. So if you're a person who rolls over your balances, it would make sense to pay attention to the payments made and not made, in order to avoid interest payments on new purchases.
Rewards and other benefits. As the cards market grows and saturation rate grows, competition amongst card companies has led to the development of intricate rewards programs with flashy products. In some markets, the cost of the card is tied to the rewards program; in Asia, this is not necessarily the case. In shopping for a card, look out for the rewards to spending ratio, that is, how much does the customer have to spend before being able to redeem a certain gift or voucher. You might also want to select the card, which gives added rewards points at selected merchants, or a card that gives double or triple the points. Being able to redeem shopping vouchers is almost the same as an outright discount on your purchase.
Hot tip. With a quickly saturating market, active promotion of cards comes in the form of telemarketing and road shows. Along with this is the offer of attractive freebies, such as dining vouchers, radios, sports bags and watches. Such offers might only be available at promotion booths or through telemarketers. If you can wait, do not apply for the card directly, but look out for such promotions to obtain your free gift.
With the above information, you are now equipped with the knowledge to make an informed decision about the most attractive card for your needs.
Michael Russell
Your independent guide to Credit Cards
