These days, almost everyone has a credit card because of the discounts and bonuses they enjoy by using it. It is also quite easy to get one, but do you really know whether the card you currently own is good for you? A kredittkort (credit card in Norway) can save you a lot of money when shopping or making other transactions.
So, whether you are a foreigner or a citizen of Norway, there are key factors you should consider before settling down for a credit card. You can click here to learn about life in Norway.
Types of Kredittkort
The types of kredittkort available in Norway and other parts of the world are:
These are plain cards and do not offer rewards or frills. You can easily understand how it works. So if you choose a standard card, you won’t experience any complicated procedures. However, choosing it also means that you aren’t interested in getting rewards.
Additionally, you can enjoy a revolving credit, but it has a specific limit. This implies that when you buy things, you will use up the credit, then additional credit will be added to your account after making payment. By month-end, if you have any outstanding balance, you will be charged for it. Every bank has a minimum amount of money you must pay before payment is due to avoid penalties for late payment.
These cards work just like their name imply; they simply offer rewards when you purchase items. There are three types – travel, cashback, and points. Cashback rewards are quite flexible, and you can use the points to redeem cash, products, or services. If you travel frequently, you can use the travel rewards to earn travel perks like hotel accommodation and free flight.
Balance Transfer Cards
Although you can transfer your balance with other cards, balance transfer cards offer lower introductory rates on such transfers. If your existing card attracts high interest and you would like to save some money, you can opt for this special card. Depending on the financial institution, the interest rate for balance transfer differs. You can find one that charges 0%, but there are certain requirements for such rates. However, you need to have a good credit score if you want to qualify.
These are specifically for students in colleges who obviously do not have a credit history. They have perks such as rewards and low-interest balance transfers. However, you must be a bona fide student at a university to get approval for student cards.
Limited Purpose Options
You can only use them at certain locations and for certain purposes. Examples are gas and store credits. You can use these options like the usual credit card that has finance charges and minimum payments.
These cards don’t have specific spending limits, but you must make complete payment for the credit by month-end. As a result, you won’t experience minimum payments or finance charges. However, late payments will lead to extra charges, card cancellation, or charge restrictions depending on the agreement on the card application form.
Before you can use these cards, you must fund them. When you make purchases, credit is withdrawn from your card balance and your spending limit will not renew except you add more funds. When using this option, do not expect minimum payments or financial charges.
Additionally, you need to understand that these cards are not like normal credit cards; you can’t use them to rebuild credit scores. They work like debit cards but are not linked to any checking accounts. You can get one to help you live within a budget.
These are great for people with no credit history as well as those with very poor credit status. The cardholders are required to place security deposits on the cards. The amount you deposit will determine your spending limit. But in the case of major defaults such as mortgage payment, your limit may be more. You need to note that this card also requires monthly payments.
As the name implies, it is specially made for business purposes. Here, business owners can keep business transactions separate from personal transactions. Change and standard cards also have business options, which is something you should consider if you are doing business in Norway.
Although this card is for your business, the bank still checks your personal credit status when reviewing your application. This is because someone must be responsible for the balance on the card. You can carry out a kredittkort test to find out which cards you can try out before settling for one.
Factors to Consider When Choosing a Kredittkort
Now that you know the types of kredittkort that work in Norway, let’s discuss some factors you should consider before choosing one.
If you prefer paying your complete balance by the end of every month, then you need the change card. It will also be good if you already have a high credit status to make you eligible for the card. Additionally, if you use your card to transfer balances, then you should get one that charges low interest on such transactions. Also, if you want to carry over your balance to a new month, ensure you find one with low interest.
As earlier mentioned, you can earn rewards when you make purchases with your card. There are different rewards, so ensure you understand how they work and the type of purchases that will qualify you for them.
This refers to the period you are expected to complete your payment before finance charges are added. Grace periods are stated in days and count from the date of billing. A longer grace period is good because you have ample time to complete your payment without incurring extra costs for using funds. Also, if there is still a balance on your card, there may be no grace period for new purchases.
Annual Percentage Rates (APRs)
APRs refers to the percentage that applies to balances carried beyond a grace period. When APRs are high, they attract high finance charges on revolving balances, which means you will pay more when using your credit card. There are different APRs for cash advances, purchases, and balance transfers. Ensure you find out the rates for each before settling for a type of kredittkort.
Your limit influences how much money you can spend. If you are a beginner to credit, you need to start with a low limit until you cultivate responsible spending habits. Although some financial cases allow your limit to be high, you should be careful of cards that offer no limit. Sometimes, they can max out your cards and reflect the same way in your credit status, which can affect your score negatively.
You need to know the fees you will pay as well as the circumstances that call for the payment of those fees. The common fees are late fees, above-the-limit penalties, and annual fees. Other actions like requesting extra statement copies, paying balance from your phone when it is due, or bounced checks may attract additional fees.
Calculation of Finance Charges
The way the financial institution calculates finance charges impacts the amount you will pay. Some institutions calculate charges using your current balance, others combine the previous month’s balance and the current one. They have the exclusive right to include or exclude new purchases when doing the calculation. If you want to avoid these charges, ensure you complete your payments by the end of each month.
Getting a credit card is a great decision, but you don’t have to stop there. You need to use your card correctly to get value for your funds. Also, if you want to have a good credit history, do not over-use the available credit and pay your bills in full each month. And if all you want are rewards, do not make any purchases without your card.