Nowadays, people have credit cards for different purposes. Banks and companies offer different types of credit cards with several options that you can choose. So maybe you’re thinking for days of getting one yourself, but you’re torn whether you need it or not. Will it help you with your expenses? Savings? Or will it only bring you stress and problems?

To help you decide, here are five things that can help you make a final decision about getting a credit card:

What Is A Credit Card

Don’t confuse yourself with a credit card and debit card being the same. When you use a debit card in spending, it gets your payment from your savings account. But when you’re using a credit card when purchasing, you’re making a loan in the bank which you will pay in the months to come, with or without interest. Depending on what option is offered, you can settle it in full after a month or fulfill the entire bill monthly.  How high the interest depends on how long you pay for it.

What Type Of Credit Card Do You Need

You can select a particular card for what you specifically need. There are credit card tips available for first-time users to guide them on how to look for the right one. You can get a purchase card which is the most straightforward card to have; you primarily use it to go shopping without paying for interest for a certain period or even if you don’t settle your balances in full monthly. If one day, you want to purchase a lot and have the option not to pay it back instantly, this card is what you may want to get. But make sure to pay your bills before the no interest period runs out for the future standard rate will be quite high.

If you want to lessen the interest on your balances, you can use a balance transfer card which gives you the option to transfer your bills to your other credit cards to be able to enjoy a no interest annually. Do take note that transferring your balances can incur certain fees so make sure to work out on how you will wisely transfer your balances.

But if you’ll have credit card balances that came from when you use your card to make some large purchases and want to spread it out to your other cards, you can get a combination of both cards so that you’ll have a no interest rate when you’re making new transactions and transferring your debts. There are other types of cards that you can search for to suit what you need.

Credit Score

To determine your credit score, it depends on five factors; payment history, credit utilization, length of credit history, number of accounts you’re using, and new credit. Paying your bills on time is the most significant factor that can give you a good credit score. Next is credit utilization, it is based on how many percents of your credit limit you use in your transactions monthly or annually,  it should always be above 30% of your credit limit if you want to maintain a good credit score.

The duration of when you started to use your credit cards also affect your credit score. It is better if you have accounts that you’re handling for a long time along with your newly opened accounts. The last two factors only affect your score on a small scale.

A good credit score ranges from 700 and above. When you have a good credit score, it gives you the opportunity to loan cash at a lower interest rate. You can also have rewards and promos that you can avail. Make sure to look for credit card tips so you’ll know how to use your card correctly.

Good Read: How to overcome credit card debts

The Rewards

Well, who doesn’t want freebies right? Companies that offer credit cards usually have reward and benefits for their clients when they reach a certain amount to spend or when they have a good credit score. When you use your credit card in purchasing something, the store’s bank pays a certain amount to your credit card bank called interchange fees; this is where your rewards came from. This interchange fee ranges at 2% or more depending on the bank promo.

Credit cards also have seasonal promos where you can get gift certificates to certain malls or stores. And if you’re lucky you can even win the opportunity to travel for free.

Good read: Tips to benefit from credit card reward points

Fee Charges

If there are rewards that come into using a credit card, for sure every card also comes with its fees. Make sure to ask if they include these fees into the credit card you’re getting.  First is the annual fee, this type of fee is charged to rewards cards that are of high-value or cardholders that have low credit scores. The amount of annual fee that you need to pay once a year depends on what class of card you have, or you can wave to pay the yearly fee if you are actively using your card.

Next is the late payment fee. You are charged with this fee if you are unable to make your payments on or before its due date. If you’re able to pay up to the minimum amount, you will not be paying for the late payment fee, but your remaining balance will incur a particular interest. So make sure always to pay full of what is indicated in your billing statement before the due date to avoid the late payment fee. There is also an over-the-limit fee, which incurs if you spend too much that it exceeds your credit limit. To avoid having this fee you may choose to have your credit card designed to be rejected if you already reached your limit.

Lastly, if you occasionally buy stuff from overseas using your credit card, there are specific charges called foreign transaction fees that you need to pay as an additional charge which can be up to 4% of what you bought. But if you frequently purchase stuff abroad, you can select a credit card that doesn’t have foreign transaction fees.

Having a credit card can be useful in so many ways if you’ll know how to use it properly.