Choosing and Using Credit Cards

Choosing a credit card is an important decision that should not be based on the promotional item being given away for signing up. Before you begin applying for credit cards, do your research! Think about how you plan on using the card and then shop around for the card that best matches your planned use and offers the best rates and benefits. Listed below are some of the elements of each card you should pay attention to before deciding:

• Annual Percentage Rate (APR) - a measure of the cost of credit expressed as a yearly rate. These rates vary widely and will make a noticeable difference in your final costs. A variable rate may fluctuate with other economic indexes. APR may be adjusted on delinquent accounts.

• Finance charges - determined by the periodic rate applied to your outstanding balance. Rate changes may affect the finance charges applied to your account.

• Annual fees - can range from $0 to $100 and even hundreds of dollars for "gold" or "platinum" cards.

• Transaction fees - fees charged to transfer a balance from another account into the given account.

• Grace period - the time during which you can repay your debt without incurring a finance charge. This is especially important for those planning to pay their full balance each month

• Hidden fees and other charges - many companies assess a fee for cash advances, missed or late payments and exceeding your limit.

• Credit Limits - the maximum amount of balance you can carry on the card

• Acceptance - how widely will the card be accepted?

• Benefits - does the card provide any perks such as cash back bonuses or frequent flier miles?
   

Once you have decided on the card for you, read the contract carefully, paying special attention to the small print and be sure to ask for a copy of your signed contract for your records. Credit cards require quite a bit of responsibility in order to build and maintain your credit score for qualification for future loans and mortgages. A few helpful hints for protecting your credit "reputation" are listed below.

• Always pay on time!

• Make as large of a payment as you can afford. Interest adds up quickly; paying more than the minimum will decrease total interest costs over time as well as decrease total finance charges.

• Try to pay off your balance each month to avoid interest fees.
  Understand the total cost of the loan, not just the monthly payments.

• Review your statements completely and report any errors.

• Avoid impulse buying.

• Be aware of your limit and try to keep your balance below it! This will allow a cushion in the case of an emergency and avoid the risk of over-the-limit fees.

• Only use cash advances for emergencies.

• Report any change of address prior to your move to ensure you will receive your bills on time.

• Know your rights! There are a number of consumer credit laws in place to protect you