Credit Cards

Choosing a credit card

Each credit card agreement has these parts to it. The card company has to tell you about each of these on the credit card offer – but you have to read the small print on all the pages of the offer to find out what they are.

Annual fee – many cards have a fee that you pay whether you use the card or not

Interest rate – the card’s interest rate is called an APR (annual percentage rate). Be careful about cards that have 0% interest or “low introductory rates.” Usually, these rates go up in 3 or 6 months. Also, there is often a higher interest rate for cash advances than for purchases.

Grace period and late fees - A grace period is usually 20 – 25 days you have to pay the bill before it is due. If you do not pay the bill by the due date, there will be a late fee (usually from $15 to $40). You may pay higher late fees if you have a big balance or if you have made late payments in the past. If the payment is late a lot of times, it will hurt your credit rating.

Note that some cards do not give a grace period. These cards charge monthly interest even if you pay the full balance every month.

Over limit fees – If your unpaid balance and new charges go over your credit limit, you will be charged an “over limit” fee (usually about $30).

You can visit another website to take a quiz to see what type of card you should look for.

A secured credit card can be a good stepping stone to a regular credit card. Click here for questions to ask about these types of cards.

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