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Visa or MasterCard: Which Credit Card Should You Apply For? (Page 1 of 2)
Should you get Visa or MasterCard? Is one of them better than the other? Will one of them help your credit rating more than the other? Many people ask themselves these types of questions when they think about getting their first credit card or additional ones. The fact is, few differences exist between the two credit card brands today, but you can benefit by having a better understanding of the two companies and using their competition to your advantage.
Just Who Are Visa and MasterCard
First, you should know that neither Visa nor MasterCard actually issue credit cards themselves. Neither company deals with consumers or merchants directly. Instead, they create and run the worldwide computer networks that process the billions of transactions that occur each day from people who use their credit cards at millions of merchants and ATMs. Both companies make their money from financial institutions to whom they license the ability to market the MasterCard or Visa system to consumers and merchants.
MasterCard and Visa have been fierce competitors for years, each vying to be faster and more global than the other, just like Hertz and Avis, and McDonalds and Burger King. Each time one brand creates a new twist on their credit cards, the other soon follows to match it. Both companies now offer nearly identical benefits, such as travel insurance, car rental insurance, product warranty extensions, and so on.
Furthermore, both cards are accepted worldwide by nearly the same number of merchants. MasterCard says its cards can be used at more than 23 million locations around the globe, including 1 million ATMs and other locations where cash can be obtained. Visa says its cards are accepted at more than twenty million locations in more than 150 countries.
In general, most merchants throughout the world accept both cards, or if a merchant takes only one of the brands, another merchant down the block takes the other. The point is, your chances of being locked out of eating or buying a gift or getting a hotel room because you have only one brand of credit card are usually minimal — other than at a few noted events where one card or the other may have negotiated to be the sole credit card to be accepted. But such instances are far and few between.
Which Card is Right for You?
Given the above, is one card better or more right for you? The best answer depends on whether its your first, second, or additional card, as follows:
If Youre Applying for Your FIRST Credit Card
In this situation, you can make a choice based simply on selecting which issuing bank you prefer to work with, or which promotional offer you like the most, without regard to the brand on the card. Perhaps you like Chase or Citibank or HSBC, or perhaps you like the 0% APR with no-annual-fee offer you found online. It’s six of one, a half-dozen of the other.
If Youre Applying for Your SECOND Card
In this situation, it is strategically smart to select the opposite brand card from your first card AND to choose a different issuing bank. The rationale for this is that when you have two different cards, you will find that the two banks will compete for your business (assuming you maintain good credit). You will get offers for 0% balance transfers, higher credit limits, and other perks as the two banks vie for your increased use of their card. And just in case you find a merchant who only takes one brand of card, you can now be assured of having all your bases covered.
Poor Credit Score? Find the Best Bad Credit Card
Having a poor credit rating can seriously limit your choices of credit cards. Most credit card companies are likely to turn down your applications, making things tough for you at a time when you most need a credit card. Fortunately though, thats not the end of it as you have another option of bad credit cards. Naturally, this is a temporary solution until you can get back on your feet. Bad credit cards can also be used to help you improve your credit score, as long as you pay your credit card bills on time, that is. The only drawback to this would obviously be the higher than usual APR interests.
Nevertheless, if you are willing to provide collateral to the credit card company, you may qualify for a secured bad credit card with a lower APR. This way, you can still earn interests on your collateral, and simultaneously enjoy good rates. The downside is, you may be charged other fees such as annual fees or start up fees.
Before you apply for a bad credit card, it is prudent to do your homework first. As bad credit cards are usually offered to those with poor credit ratings, the APR would unlikely be low. Thus, comparing the various offers of bad credit cards out there would be a wise move.
One of the primary factors of consideration includes the upfront fees that credit card companies would charge you. In order to make a wise evaluation, its best that you have a plan to pay off your debt before your interests snowball. Other factors that you can use to help you make a better decision would be to analyze the reward programs that your bad credit card can offer. If you are entitled for retail discounts at specific retail stores when you charge to your bad credit card, this would be even more enticing.
With all these factors to consider, it is clear that you should look around before you apply for a bad credit card. Compare and contrast the various fees and rates of the candidate companies. Only after careful consideration should you take the next move and submit your application.