Credit Cards - Balance Payment

Always pay off balance in full every month You use your credit card for everyday purchases, from groceries to petrol to household goods, and you never carry a balance over to the next month. In your case, the interest rate is irrelevant, as you'll never suffer the consequences of it. To avoid paying any charges at all, choose a card with no annual fee; however, you may prefer a card with a small annual fee that offers bonuses on the amount spent, such as travel rewards or cash back on purchases. As a regular spender, you'll be able to realise these bonuses more quickly.You need to ensure first that the card you choose has an interest-free period, and that you always pay before that period is up. Some cards offer up to 59 days interest-free, and you can ensure you are always on time with your payment by setting up a direct debit with your bank for the full amount each month.If you ever plan to use a credit card for big-ticket items as well, such as holidays or large purchases, and not paying off the full balance immediately, it may be worth getting another credit card with lower interest charges and using it only for that purpose. Usually pay off balance in full each month You use your credit card regularly, for everyday purchases as well as the odd luxury item, and though you try to pay it off in full each month you don't necessarily mind carrying the odd balance over. In your case, the interest rate isn't irrelevant - you need to ensure that you don't pay heavily for not paying off in full each month. To keep charges down, choose a card with no annual fee, and a low standard rate of interest. You may also be interested in cards with cash back or travel rewards schemes, but these cards will not necessarily have the lowest interest rates. Check the rate of rewards on each scheme to determine whether they are worth it for you; for example, if your average monthly spending rewards you with a basic domestic air ticket three years from now, you would probably save that much money by simply choosing a no-bonus low-interest credit card instead. Rarely or never clear balance each month You're the credit card companies' dream client, the one they make their money from, so you need to ensure they make as little as possible. Shop around for the lowest interest rate you can find. In your case, a low introductory rate may not be a wise choice, unless you are prepared to switch cards again after the introductory period is over and the rate usually switches to a much higher one. Look for a low standard rate and no annual fee.If you choose a low introductory rate - sometimes as low as 0% - that rate will revert to a standard level when the introductory period is over, so you'll need to look for a new card after six months or so depending on the offer. If you are already carrying a large balance, many cards now offer a low (sometimes 0%) rate on balance transfers as well as a low introductory rate, reverting to a standard rate after a certain time period and/or on any new purchases made on the card. If you have a balance you want to pay off, you may consider shifting it to a separate card with a low balance transfer rate, and making new purchases on a separate card. If you are trying to clear a balance, it's important to note that unless you are paying no interest at all, that balance will continue to rise even if you don't make new purchases. It will also take much longer to clear if you are paying only the minimum amount each month, as most or all of that payment will go towards interest charges. Paying a larger amount than the minimum each month will ensure that your debt is paid off more quickly.