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  1. #1
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    Default Credit card help please which one to pick

    Can someone who is smart on this please help me.. im trying to find the right credit card..
    Option one is $55 a year but low 13% interest rate
    Option 2 is free per year and 18% interest rate.
    I would use the card mildly.. maybe up to $2000 at a time and not completely paying it off each month..am I better off going for the low rate but paying a yearly fee? Or no fee one?
    So hard for me to figure out.. any help appreciated.. thanks.. its hsbc and st george banks by the way.. thanks

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    I guess a lot depends on what you anticipate the monthly balance to be.

    If its about $2k - the annual interest @ 13% is $260, or @ 18% is $360. So if your balance was $2k you would be better off paying the $55 fee and having the lower interest rate.

    If you were going to pay more of it off each month, and have a say $500 balance owing, then you are better off not paying a fee, as although the interest rate is higher, the difference between the interest payable at 13% and 18% will be less than the fee.

    (at a balance of $1,000 the difference in interest payable is $50)

    overall - its fairly marginal. I would go with whichever bank you have greater access to, and whichever one you feel more comfortable with

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    None! Worst decision ever to get a credit card.

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    It might be worth looking at other options as well. If you go to a site like ratecity you can compare a bunch of different cards by the criteria that's important to you.



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    Quote Originally Posted by BH-KatiesMum View Post
    I guess a lot depends on what you anticipate the monthly balance to be.

    If its about $2k - the annual interest @ 13% is $260, or @ 18% is $360. So if your balance was $2k you would be better off paying the $55 fee and having the lower interest rate.

    If you were going to pay more of it off each month, and have a say $500 balance owing, then you are better off not paying a fee, as although the interest rate is higher, the difference between the interest payable at 13% and 18% will be less than the fee.

    (at a balance of $1,000 the difference in interest payable is $50)

    overall - its fairly marginal. I would go with whichever bank you have greater access to, and whichever one you feel more comfortable with
    Thank you! That explains it really well.. does that interest mean monthly though so say $50 charged monthly?

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    no - that was the annual interest.

    But remember, your monthly repayment will be interest plus a repayment of the principal $2,000

    I am not sure how long CC's give you to pay off the balance. Lets assume its 12 months.

    So your principal would be $2,000/12 = $166.67
    and your interest would be $2,000*.13/12 = $21.67
    total monthly repayment $188.34

    this would reduce slightly over time if you did not continue to spend on the cc (as the interest is calculated on the monthly balance)

    But if you were to spend back up to the $2k mark .. the interest is calculated on the new balance.

    Its an expensive debt. What are you planning on purchasing?

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    I really can't suggest strongly enough that you get a debit card rather than a credit card. You can use it exactly the same way, you just need to outlay the money first. Put $2000 on it, and then pretend like it's a credit card and you have to keep it at $2000 rather than at $0. This way you will never owe the bank money and not get charged any interest, but it otherwise works EXACTLY the same.

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    Quote Originally Posted by CazHazKidz View Post
    I really can't suggest strongly enough that you get a debit card rather than a credit card. You can use it exactly the same way, you just need to outlay the money first. Put $2000 on it, and then pretend like it's a credit card and you have to keep it at $2000 rather than at $0. This way you will never owe the bank money and not get charged any interest, but it otherwise works EXACTLY the same.

    Thank you you have given me something to think about... I dont want to be in debt so I might just hold off.. I dont know so confused! Maybe as a back up juwt5 in case card.. then the 0 fee one would be best I suppose

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    Take a look at the Gem Visa - especially if you're going to be doing large purchases. You get 6 months interest free on every purchase over $250 - I found it excellent for our dental expenses, pay it on the card, then pay it off before the interest free period is up.

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    I would only ever recommend a credit card if you can pay it off every single month and not pay any interest. If you can't afford to buy something right now, saving for it is best, credit cards should only be used for convenience, not for small loans, and as PP has said, debit cards can be used in the same ways credit cards can so the convenience factor is not really even a consideration anymore.


 

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