Choose a Credit Card That Fits Your Credit Needs and Lifestyle!

It may seem most credit cards have the same features and benefits, but there are important differences. Consumers should read the card offers carefully and apply only for the ones meeting their credit needs and lifestyle. By becoming familiar with basic card terms, you can save time, money and aggravation while taking full advantage of Intro APR offers, reward programs and other features and benefits.

First, analyze your credit needs and spending patterns, deciding what rewards you would like to receive for using the card. Second, learn key credit card terms so you may understand the offers available on the Internet and elsewhere. Finally, set criteria based on your own needs and compare offers from different issuers. Here are some basic terms that can help you manage your credit card affairs:

Annual Percentage Rate (APR)- If you tend to carry balances on your cards, you should look for the card with the lowest APR on purchases and the longest grace period.

The APR may be fixed or variable. A fixed APR remains constant because it is not linked to the Prime Rate or other economic indicators. Card issuers always reserve the right to raise (or lower) the APR, but they are required by law to send a written notice to card members at least 15 days prior to the new APR's effective date.

Variable APRs are linked to the Prime Rate and may change more often. Credit card issuers usually determine variable rates by adding the Prime Rate to a certain percentage rate (for example, Prime Rate plus 9.99%). If we assume the Prime Rate to be 4.25%, then the APR would be 14.24% (4.25% plus 9.99%).

Be aware credit cards may have different APRs on purchases, balance transfers and cash advances. Cash advances have the highest APRs.

Intro APR - Introductory APR, also known as a promo or teaser rate, may apply to purchases and/or balance transfers. Intro APRs expire after the introductory period ends (usually 6 to 12 months), after which the Standard APR is used to calculate interest charges. Intro APRs almost never apply to cash advances.

Always remember to make at least the required minimum payment, or your Intro APR may be bumped up to the Standard or Default APR, which are generally much higher than the Intro APR.

Annual Fee - Most major credit cards come without an annual membership fee. Unless the card offers a value-added reward program, such as travel rewards, you should avoid cards with annual fees.

Credit Limit - Choose the card with a credit line that will satisfy your spending needs. Credit limit is usually assigned when your application is reviewed based on your creditworthiness and other factors, such as total annual income. Many issuers advertise credit lines of up to $100,000. The key word here is "up to"; not all applicants (in fact very few) qualify for such high credit lines.

Grace Period - This is the interest-free period between the purchase and the billing date. If you pay your balances in full each month, your cost of borrowing for that period is zero. Most credit cards have grace periods ranging from 20 to 25 days. After the grace period ends, your balances will start incurring interest charges.

Generally, grace periods do not apply to cash advances where interest charges start accumulating on the first day of the transaction.

Worldwide Acceptance - Most major credit card companies such as Visa®, Master Card®, Discover®, and American Express® are accepted around the world. However Visa is more widely accepted overseas than Master Card, Discover or American Express®; so if you are a true world traveler you may want to carry more than one credit card for additional "security" and convenience.

Rewards -Choose the reward program based on your own interests and needs. The most popular reward programs are cash back and travel rewards.

Cash back cards, such as the Discover Card, accumulate points which can be redeemed as cash or used to purchase discounted products or services.

Travel reward cards earn points towards travel-related services such as airline tickets, hotel accommodations or car rentals; other reward programs allow you to accumulate points towards purchases at your favorite merchants or invest in college education funds.

Choose the reward program most valuable to you, and always read the program's terms and conditions to maximize your benefits and avoid unpleasant surprises.