It seems that credit card offers are thrown at you from every direction: stores, websites, your mailbox and even your email aren’t safe from them. However, if you are indeed interested in a credit card, some of those offers may have looked appealing. Unfortunately, you shouldn’t judge a card by its cover. It’s important to choose your card carefully to avoid problems later.
Numerous different credit card types exist for you to pick from, each for a different purpose. There are normal cards, student cards, charge cards and those with perks, just for a few examples. Before applying for a card, be certain of what kind it is.
The card you choose will depend on how you intend to use it. If you plan to pay off your full balance every month, a charge card may serve you well. Unfortunately, qualification requires you to have a superb credit rating. Do you want something that allows you to transfer your balance? Then consider a card that provides this at low interest. Maybe you even intend to let your balance carry from one month to another. A card with a low interest rate is the best option here.
Pay close attention to the APR, or annual percentage rate, which is how much interest you’ll owe on overdue balances. The higher it is, the more you’ll pay when you pay late. Beware that most cards’ APRs differ between purchase types, so do your research.
This is how long you have between when the balance is actually due and when you’ll receive late fees. This is typically shown as days after billing, such as 30 days. The longer your grace period, the better. This gives you a lot more financial wiggle room when it comes to paying bills.
It’s very important to be aware of all of the potential fees your card comes with, as well as the events that will trigger them. These often, but not always, include things like over-limit fees, late fees and yearly fees. Other sources of fees can include charges for paying your balance via phone on the date it’s due, requesting statement copies and returned or bounced checks.
Find out how your card carrier calculates finance charges, as this will have a large effect on the cost. Some may only figure this month’s balance, but others might use this month’s and the last. Furthermore, some may not include new purchases in this figure.
The limit of your card impacts your purchasing ability. If this is your first card, begin with something that has a low limit until you feel confident that you can use it responsibly. Depending on your financial position, you may be able to get a higher limit. Be cautious of getting one with no limit. These can look bad on your credit report and give you a low score.
Many credit card companies out there give you different perks for using the card. However, make sure that you’re aware of all the details. It may only apply to certain purchases, spending over a certain amount or buying at specific stores.