What to look out for when signing up for credit cards
What to look out for when signing up for credit cards. If we were to go back a little in time, just eight or ten years, we would find a scenario, then prevailing, which gave the impression of a kind of free bar of cards that led users to possess many more than strictly necessary.
After the outbreak of the crisis and the closing of the credit tap, the abuse of credit cards began to take its toll, in fact, it was the first to multiply its delinquency rates exponentially. Today it is clear to us that an excess of cards is not a good idea, nor is a bad choice of credit cards.
We will therefore dwell on the main points of interest that we should always analyze before accepting the contracting of credit cards, these elements are essential to determine if we are before the product that we need or, on the contrary, before a product that can end up not being of the utility that we expect.
To begin with, we must be clear that not all cards are the same for all users; this means that there are users who prefer some aspects more than others and therefore should pay more attention to the elements that determine those aspects than to those that do not have such an influence. This is important because, in fact, depending on the card model chosen, the features are different and this is one of the first common mistakes.
How am I going to use the card?
This is the first question we must ask ourselves and the first element that we must always take into account; in short, it is a question of defining which card model is the most convenient for us. A card that will only be used for specific purchases will not be the same as an all-purpose card, or a card oriented to deferred payment.
Nowadays the variety is still very large and therefore we will always, first of all, determine this aspect.
Linked card or not?
This is another relevant question, linked cards are usually associated with other products such as payroll accounts or similar. Obviously these are cards that bring advantages from the point of view of commissions and even expenses related to the cost of maintenance, however, the fact of remaining associated with other products is not always a good idea. If, for example, we are happy with the functioning of our direct debit accounts, accessing a required linkage is not usually a sufficient reason to change card.
What are your costs?
Of course, another relevant question. The difference between costs can be very high, however, here it is advisable to be cautious. We tend to review the immediate costs, i.e. what it will cost us to contract and maintain the cards, this is of course foreseen by the financial institutions, and, in fact, one of the main hooks of commercial attraction is the elimination of the cost of contracting and the cost of maintenance. However, this elimination may be relative; in fact, in many cases it refers exclusively to the first year, and from the second year onwards a certain level of use is required in order to be free of charge. It is true that this level of use required has been reduced over the years, but it is there and must always be taken into account as a condition.
What associated insurance does the credit card provide?
This is not a minor factor. Let’s take an example; for a user who usually travels frequently, credit cards with associated travel insurance with extensive coverage are more interesting than for those who do not travel as often. Sometimes we take the insurance section of the cards as a minor element when considering their contracting, however, they are indeed of great importance and must be taken into account.
How many cards is it advisable to have?
This is a delicate question on which not everyone agrees. There are those who say that a single card is sufficient, but at the other extreme, there are those who are in favor of specializing the cards to take better advantage of their features by using them in the right context.
An example of the latter would be the combination of up to three differentiated cards configured as follows:
- An all-purpose credit card: this is the card used for cases of specific need for a payment not contemplated, or for a forced cash withdrawal, in short, for multiple use, in fact it could be considered as the reserve card.
- A credit card with discounts: depending on the use that we are going to give the cards with discounts can be very effective, in the market there are cards that in a single product combine discounts in commercial establishments, in fuel refueling and in other types of consumption.
- A deferred payment credit card: This is also a complementary product in which, in its best versions, the deferral of payments does not involve the application of fees for a period of time (relatively short) while exceeding that period of time apply certain fees depending on the term and the amount. Very suitable for large purchases in shopping centers or even for purchases requiring deferred financing.