Financial Future

With so many choices available, it’s challenging to weed out the good offers from the bad. To find the best credit card deal for you, you’ll need to understand some basic principles regarding how charge cards work.

Choosing a Credit Card: The Basics

The first thing you’ll want to do when choosing a charge card account is to evaluate your options. Rather than signing up for the first credit card account that appears in your mailbox, save up the offers that appear for a month or two.

Evaluate the credit card account offers you’ve received, realizing not all credit card account offers are equal. You’ll want to take notes on how the offers differ, so you can be sure you are choosing the credit card account that offers the best APRs and lowest fees. You also want to make sure that the offer is optimal for your situation. Use a highlighter to highlight any terms or conditions that concern you. Read the fine print. Call the credit card company and speak to someone in customer service if you don’t understand something in the contract.

If you are a new creditor (either a young person just starting out, or perhaps you have never held credit card accounts in your name before), you may have to start with either a secured credit card account or a credit card with a high interest rate. The options available to you will depend on your credit history. If you establish a good credit history through wise utilize of your first card, you can choose an unsecured charge card account with a better interest rate, higher credit limit and lower fees later.

When choosing a charge card account, you’ll often come across the term “pre-approved.” People mistakenly assume that becautilize the offer says they are pre-approved, they will get the charge card account offered. This only means the charge card account’s initial information about you indicates you should be in their accepted credit rating bracket. The credit card company will still perform a thorough credit check before they approve your application, should you choose their credit card account.

What to Look For When Choosing a Credit Card

Look for the best annual percentage rate available. Check to make sure the annual percentage rate on the charge card account you are choosing does not change over time. If it does change, make sure you can absorb the increase in interest or will be able to pay off the balance each month so the APR hike will not adversely affect you.

Check the credit limit. Choose a card with a high credit limit and then use only half of that limit. This maximizes your credit health rating with the credit bureaus.

Choose a major credit card account with a known name. Major charge cards such as Visa, MasterCard, Discovery and American Express all hold more weight with credit bureaus and other lenders than the lesser-known cards and department store cards. Responsible utilize of a major credit card (never maxing out the credit limit out and making all payments on time) is a solid baseline for establishing a healthy credit rating.

Ignore the special offers and perks, and focus on the actual terms of service. While gaining airline miles or cash back are nice perks, you need to choose your charge card based on the real benefits or costs-the APR and fees charged, the credit limit granted and the reputation of the card.

If you want to take advantage of cash advances, choose a charge card that will send checks to your home or let you get cash advances at an ATM. Remember that the annual percentage rate and fees will most likely be higher for cash advances than the terms on the normal charge card account usage, so you’ll need to factor these extra expenses into your credit card account choice.

Compare credit limits, cash advance allowances and how the payments will be credited. Many creditors apply payments to the principal balance derived from purchases first, only applying payments to the cash advance balance after the principal has been paid off. This benefits the charge card account company, but not you, the consumer.

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