What To Look For When Choosing A Credit Card

personal debt

If your credit rating is fairly good, then you probably receive credit card offers in the mail on a regular basis. Companies lure new customers with introductory 0% interest rates or low rates for balance transfers. If you receive such offers, then read the fine print before you apply for a card. Before you accept any offer, take a look at your financial situation and your debt management capabilities; you don't want to add to your personal debt.

The first thing most consumers look at in credit cards is the annual percentage rate, or APR. While this is an important factor, it is not the only thing to consider when evaluating offers. You also need to look at things like finance charges, over-limit fees and late charges. These things can add up to a higher than expected bill. If you plan to pay off your balance every month, then you should also look at the grace period. This is the period of time you have to pay off your balance before the company starts charging interest. In recent years, grace periods have gotten shorter, and many card companies have done away with them altogether. However, many companies still have grace periods as long as 25 days. If you pay off your credit cards every month, then this will be a benefit to you.

Many consumers look for credit card offers with low introductory rates or low rates for balance transfers. Some companies offer rates as low as 0% APR. Consumers with a lot of debts can save money in interest by taking advantage of such offers. If you decide to take advantage of these low rates, remember they are only temporary. You should apply for a card offering them only if you are fairly certain that you will be able to pay off your balance before the introductory period expires.

In past years, when consumers had reached their credit limits, card companies would decline further purchases. It has now become common for the companies to accept the charge and then hit the customer with an over-limit fee. This is one more factor to consider when comparing credit card offers. There are many websites where consumers can find comparisons of various companies and their offers. In particular, you can go to the Federal Reserve Board's website at www.federalreserve.gov. Do some research before you apply for a card. Being an informed consumer is always a wise idea.