Best Credit Card Application for You
How in the world do you decide on the best card
for you? "Shop around. In general everyone
wants the card that costs the least and saves
If you have bad credit or no credit, no problem,
On the other hand, if you have a very good credit
rating and would like a higher limit, check into
applying for a Gold or Platinum card at the same
or lower interest rates.
How Do You Choose The Best Credit Card
Your Payment Style
Your credit habits will be a strong factor in
choosing the right card for you.
- Will you pay off your balance in
full every month?
If you pay your bills in full every month the
interest and finance charges don’t matter
much. You should look towards finding cards
with little or no annual fee., You should look
for cards that offer rewards or incentives.
Also make sure your card carries a grace period
before charging interest on purchases
- Will you carry a balance?
If you carry a balance, you will want to cards
with low interest rates. The APR and the method
of computing your balance are key factors. Look
for a card with a low interest rate and the
right mix of rebates or rewards to justify any
Credit Card Plans
What to compare among credit cards:
- Annual Percentage Rate (APR)
APR is the interest rate reflecting the total
yearly cost of the interest, expressed as a
percentage rate. The lower the APR, the less
you will need to pay in interest if you do not
pay your balance of at the end of each month.
The card issuer must also disclose the periodic
rate, that is, the rate the card issuer applies
to your outstanding account balance each billing
- Grace Period
The length of time between purchase and finance
charges. Gives you 20-25 days free money after
which finance charges will take effect. Make
sure you card has one.
- Fees and Other Charges
Most issuers charge an annual fee, cash advance
fees, late payment fees, and over your credit
What's more important when choosing
a credit card
||Pay off each month
||Carry a balance
How APRs make a difference
The following is an example of the annual savings
you could achieve by switching to a credit card
plan with a lower interest rate and no annual
Assumption: In this example,
the average monthly balance carried forward equals
$2,500, which is about the national average for
consumers with credit card debt.
|Average monthly balance
|Amount paid in finance charges annually
Read the Fine Print
Read the fine print. Know the details. They
make all the difference in the actual cost of
your credit card.
Credit card issuers use a complex system for
calculating the interest rate. Some banks charge
a fixed APR (annual percentage rate) that doesn't
change, while others charge a variable APR which
is tied to an index, such as the prime rate.
Most of them charge interest on the average
daily balance, which is calculated by adding the
daily balance up for a month and dividing that
number by the number of days in the month.
- Introductory rates.
Teaser rates, are rates used by the credit card
companies to get you to take their cards. They
generally last 3 to 6 months then the interest
rates climb again. These are good for saving
money if you have the discipline to pay attention
and move your pay off your bill or move your
money before the low rates expire.
Again read the fine print. Sometimes the teaser
rates apply only to balance transfers or only
to new purchases or expire if you make even
1 late payment.
- Balance transfers.
Balance transfers to low rate card can be a
profitable idea, however, remember to read the
fine print make sure what the fees are, what
the interest rate is and how long that rate
- Credit limit
This is the most the card company will let you
borrow. Go over the limit and they will charge
you extra fee until you pay it down.
For more information on important credit terms
in your application, see the Fine Print page
- Avoid accepting too many credit card
Carry only a few cards, having too many .even
if you don’t use them, can reflect poorly
on your credit score.
- Beware of temporary "teaser"
Remember these expire quickly leaving you with
sky high interest. Be sure to pay off or transfer
balances before the low rate expires.
- If your rate is variable, understand
the basis on which it may change.
Variable rates can cost you a lot of money,
avoid them if possible, if not know the terms.
- Investigate terms related to late
payment charges and penalty rates of interest.
Fees, fees and more fees. Late fees, over limit
fees, cash advance fees, annual fees, and more
if they can think of them. Know the contract,
read the fine print and stay on top of your
credit card bills.
- Learn your credit card's billing
Know your grace period.
- Always read both the disclosures
and the credit contract.
Read the fine print then read it again. If you
don’t understand something call them and