Is there any such thing as a best or ideal credit card? If so, what would it
be like? What all features, fees and interest rates will it charge? Every individual
has a unique financial situation and so are his demands on credit card, but
there are certain parameters, common to all credit cards, which if analyzed
properly should give us a picture of how an ideal credit card should look like.
Here is my take on a best or ideal credit card.
- The Introductory Annual Percentage Rate (APR) for Purchases should be 0%
for a long period. By saying long period we mean 12 months or more.
- After the 0% Intro APR for purchase rate expires the Standard APR will apply
to all purchases made by your credit card. The ideal credit card should offer
a low Standard Purchase APR ranging from 7% -12%.
- The Introductory Balance Transfer APR of an ideal credit card should be
0% specified for a period (go for the one which gives this offer for at least
- The Standard balance transfer APR which applies after this 0% Intro period
is over should be low. Varying in the range from 4% -12%
- Credit card companies levy penalty or default APR if credit card monthly
payments are missed. The ideal credit card will not have harsh Default APR
triggers, and the Default APR should be low. In addition to it there should
be specific terms on how the default APR would be revoked once applied.
- Though it is not a good idea to take cash advance with your credit cards,
but if circumstances compel the credit card should be able to provide it at
a comparably low Cash Advances APR Rate. A cash advance apr around 20% would
be a good feature.
- Grace period should be around 25-30 days. Care should be taken that the
grace period feature isn't tied up with a clause which requires that the credit
card holder should pay his outstanding balances in full each month.
- An ideal credit card won't come with any annual fees.
- The minimum finance charge should be low in the range of $0.25 -$0.5.
- A credit card which comes with no fees and finance charge would be a dream,
but in real world we don't have any such example. Confirming to real world
situation a credit card with low late fees, low cash advance transaction fees,
low overlimit fees, low balance transfer fees would be a good choice. The
point that makes the difference is an upper limit to these fees. If the credit
card doesn't have any such upper limit it can charge a huge amount as fees,
on any of your default or transaction.
- A best credit card will come with a great reward program. Easy to redeem
and without any expiry or restrictions, the credit card should truly reward
The best things are reserved for the best- this thing fits precisely for credit
cards. Those with the best credit ratings can get a credit card which will closely
match the above mentioned features. As the credit rating declines so will the
benefits associated with the credit card.