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Useful Tips When Choosing Credit Cards
By: John Mussi
Chances are you have received your share of "pre-approved" credit card offers in
the mail, some with low introductory rates and other perks. Many of these
solicitations urge you to accept "before the offer expires." Before you accept,
shop around to get the best deal.
Credit Card Terms:
A credit card is a form of borrowing that often involves charges. Credit terms
and conditions affect your overall cost. So it's wise to compare terms and fees
before you agree to open a credit or charge card account. The following are some
important terms to consider that generally must be disclosed in credit card
applications or in solicitations that require no application.
Annual Percentage Rate:
The APR is a measure of the cost of credit, expressed as a yearly rate. It also
must be disclosed before you become obligated on the account and on your account
statements. Some credit card plans allow the issuer to change your APR when
interest rates or other economic indicators - called indexes - change. Because
the rate change is linked to the index's performance, these plans are called
"variable rate" programs.
Free Period:
Also called a "grace period," a free period lets you avoid finance charges by
paying your balance in full before the due date. Knowing whether a card gives
you a free period is especially important if you plan to pay your account in
full each month. Without a free period, the card issuer may impose a finance
charge from the date you use your card or from the date each transaction is
posted to your account. If your card includes a free period, the issuer must
mail your bill at least 14 days before the due date so you'll have enough time
to pay.
Annual Fees:
Most issuers charge annual membership or participation fees.
Transaction Fees and Other Charges:
A card may include other costs. Some issuers charge a fee if you use the card to
get a cash advance, make a late payment, or exceed your credit limit. Some
charge a monthly fee whether or not you use the card.
Other Costs and Features:
Credit terms vary among issuers. When shopping for a card, think about how you
plan to use it. If you expect to pay your bills in full each month, the annual
fee and other charges may be more important than the periodic rate and the APR,
if there is a grace period for purchases. However, if you use the cash advance
feature, many cards do not permit a grace period for the amounts due - even if
they have a grace period for purchases. So, it may still be wise to consider the
APR and balance computation method. Also, if you plan to pay for purchases over
time, the APR and the balance computation method are definitely major
considerations.
You'll probably also want to consider if the credit limit is high enough, how
widely the card is accepted, and the plan's services and features.
Useful Tips:
Keep these tips in mind when looking for or using a credit or charge card.
Shop around for the plan that best fits your needs.
Make sure you understand a plan's terms before you accept the card.
Hold on to receipts to reconcile charges when your bill arrives.
Protect your cards and account numbers to prevent unauthorized use.
Draw a line through blank spaces on charge slips so the amount can't be changed.
Keep a record - in a safe place separate from your cards - of your account
numbers, expiration dates and the phone numbers of each issuer to report a loss
quickly.
Carry only the cards you think you'll use.
About the Author:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the
best available loans via the
www.directonlineloans.co.uk website. |
