Selecting A Credit Card

Posted by Nick Niesen on October 29th, 2010

How many "pre-approved" credit card offers do you get in the mail in the average month that seem to shout at you to accept the offer before it expires? If you're in the market for a credit card, take some time to shop all the offers to get the best credit card available to you.

First, look into the credit card terms and conditions. These are the fees associated with making purchases on the card, transferring balances to the card, taking cash withdrawals, and late fees. You can easily compare the annual percentage rate between credit card offers. The annual percentage rate is a way to measure what the credit actually costs you. Beware of variable annual percentage rates- and if you are considering credit card offers with variable APR's, find out how often the rate can be changed, how it effects the finance charges you are billed each month, and what the rate is based on.

Secondly, find out whether or not the cards in question charge an annual membership fee. Annual fees can be anything from $25 to $100 a year, with some platinum credit cards charging several hundred dollars. This is a fee that you are required to pay each year just for having the card in your wallet- even if you never make a purchase or transfer a balance to the account. If you're going to pay an annual fee on a credit card, there should be rewards or low rates that make the fee worth paying.

Look into the grace period of the credit card. Many cards will give you about 56 days to make payments interest free, without finance charges, just by paying your entire balance on time. Cards that do not have this free period can charge you a finance charge from the date you make a purchase on your card, or from the date each charge is posted to the account. Also consider transaction fees, and another fees associated with having the credit card. Just about every credit card will issue a fee if you take a cash advance or make your payment past the due date. Find out whether or not there is a monthly fee charged to the account when you don't make any purchases- there are some credit cards that will charge you monthly even if you haven't taken the card out of your wallet, and those are fees you can easily avoid just by selecting a credit card that doesn't have these additional fees.

You'll also want to consider the reward programs offered from each credit card you are considering applying for. If you are a frequent traveler, it makes sense to look at rewards programs that earn you discounted flights, hotels, and car rentals when you purchase your travel expenses and tickets using the credit card. Over time, your purchases will result in free travel, making the credit card with the travel rewards program a great choice for the frequent traveler. A very popular form of credit card rewards program is the cash back offer. These credit cards will reward spenders with 1% to 5% cash back for all of their purchases- either credited back to the credit card or sent as a check to the card holder. This may be a good card for you if you pay your balances off each month in full- because typically a cash back card will have a higher percentage rate than cards without cash back programs.

The bottom line in selecting a credit card is not to jump on the first offer that comes through the mail. You really need to spend a little time doing your homework and learning about the different credit cards available to you in order to get the best rates and best deals for your credit purchases.