Everything You Need to Know About Credit Cards
Introduction:
Shopping around for a credit card can save you money on interest and fees. There are several questions you should answer prior to applying for a credit card. What are the APR’s? What are the Fees? Does the card offer incentives and other features? All of these questions have to be asked and answered in order to find the right credit card for you in the short and long term.
What are APR’s?
The annual percentage rate “APR” is the way of stating the interest rate you will pay if you carry over a balance, take out a cash advance, or transfer a balance from another card. The APR states the interest rate as a yearly rate. A single credit card may have several APR’s; one APR for purchases, another for cash advances, and yet another for balance transfers. The APR may increase if you are late in making payments. If you carry over a part of your balance from month to month, even a small difference in the APR can make a big difference in how much you will pay over a year. Shop for the lowest annual percentage rate APR you can qualify for. If you pay off your balance every month, which I HIGHLY recommend, the APR is less important because you’re not paying interest. The higher APRs are often hidden in the small print, but the cards with lower APR’s advertise them so as to attract new customers.
What are the Fees?
Most credit cards charge fees under certain circumstances. Balance-transfer fees are charged when you transfer a balance from another credit card. Late-payment fees are charged if your payment is received after the due date. Set-up fees can occur when a new credit card account is opened. Return-item fees are charged if you pay your bill by check and the check is returned for non-sufficient funds. Some credit card companies charge a fee if you arrange by phone for payment to be transferred from your bank to the company or to cover the costs of reporting to credit bureaus, reviewing your account, or providing other customer services. If you go over your credit limit, you may incur an over-the-credit-limit fee. You need to pay attention to annual fees. Some credit cards offer “No Annual Fee,” while others charge annually to receive the benefits of their cards. Read the information in your credit card agreement to see if there are other fees and charges.
Does the card offer incentives and other features?
Being able to earn rewards, cash back, or airline miles for your everyday purchases can be a great reason to get a credit card. There are many awesome rewards programs available. I generally go for the cash rewards program as my spending is diverse. If you spend a lot on gas or airfare, then check out rewards programs which give you free airline tickets or more reward points at gas stations. Also many of the rewards programs have restrictions on them when you miss a payment or when your account is not in good standing. If you want someone else to benefit from your spending there are also cards that offer charitable rewards for health related and environmental causes. Keep in mind that all of the rewards, points, miles and introductory rates are only as good as your credit habits. Missed payments often void your introductory rates and many times will negate the rewards you have earned.
Conclusion:
In conclusion, credit cards are a wonderful way to leverage your money. Credit cards help you build a credit history so you can make large purchases such as a new automobile or home. It is important to do your homework before completing an application. If you will keep in mind the points I have made in this article such as APR’s, fees, and rewards offered, you will be well on your way to choosing a wonderful credit card and building a strong credit history.
