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Credit Cards - fine print
 Jul 26, 2004

When you sign up for a credit card, you are making a major commitment. Choose your credit card offers carefully, and know the terms of the fine print before you sign. You are charged interest, and your payment history will be reflected in your credit report and score.

Because of the nature of credit cards as a loan, it is important to be careful when choosing from your credit card offers.  Every time you apply for a credit card, your credit will be checked, and this can affect your score. This means that you should avoid applying for more than one or two credit cards within a six month period.

Choosing amongst credit card offers

Before you sign and send in your credit card application, you should have some questions answered. You need to be choosy about which credit card offers you accept. You want the best possible card, and you do not want to apply for several cards before you find it. Here are some items to take into consideration before you make your decision:

Interest rate

This is perhaps the most important thing to look at when choosing your credit card. You need to know how much the interest rate is going to be, since that will determine your financing charge (and make up a good portion of your minimum payment) each month. You should know the following about your interest rate before you make your decision:

  • Is it an introductory rate? Find out whether that low rate is going to get higher. Also, you need to find out whether the intro rate applies to purchases and balance transfers, and you should know how long the intro rate is good for.
  • Is the final rate variable? You need to know whether you will have a fixed rate or a variable rate when the intro period is over.
  • What is the default rate? If you are late or miss a payment, or go over the limit, the card company can charge you a default rate. You should find out how this rate is.

You should also find out how the interest is compounded. Is it compounded monthly or daily? Is interest charged on an average daily balance, two cycle billing or is some other method used. The answers to these questions can help you make your decision. As a general rule, it is best to avoid credit cards that use two cycle billing.

Annual fee

Some credit cards charge annual fees for their use. You should try to stay away from cards with annual fees. In some cases, you can have the annual fee waived for the first year. For other cards, the annual fee is waived as long as you charge a certain amount of money every year. Carefully determine whether this is worth it to you.

Other fees

You also need to consider the other fees that the credit card company may charge. These fees include the following:

  • Over the limit fees.
  • Balance transfer fees.
  • Foreign transaction fees.
  • Late payment fees.
  • Application fees.

Be aware of the types of fees that are charged and how much. Try to avoid applying for credit cards that have a lot of high fees.

Grace period

This is the amount of time that you have before the charges start accruing interest. Look for a credit card with a generous grace period, so that you have more time to pay off the balance before interest is charged.


Finally, look at the kinds of rewards program the credit card offers. You want a program that works for you and is flexible. Find out what kinds of purchases qualify, and how points you get for each dollar you spend (sometimes it varies). Make sure that the rewards program is something that makes sense for you and that you will actually be able to use.

There is plenty to consider when choosing a credit card. You should carefully think about what is being offered before you make a decision, and only apply for the best possible card.

Related Article: Best Credit Card Deal? >>

* See the online credit card application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the "Apply Here" button, you can review the credit card terms and conditions on issuers website.