Choosing Your Credit Card

This week I received three credit applications and approvals from credit card companies. I did not apply. They appeared from this air...or so it seems. There seem to be more lenders than borrowers and competition is fierce. This means that borrowers have more choices and can haggle more. Credit card companies will offer low starting interest rates or high credit limits to entice you.

If you are looking for a credit card, the best thing you can do is take your time and look at cards being offered by many different lenders, so you can get the best possible deal. Don’t just fill out that application you get in the mail and send it back in assuming it is a good deal, do your homework first, to make sure it really is as good as it seems to be. It is also important that you very carefully read and understand all of the fine print, and the terms and conditions of the card, so that you can find out exactly how much that card will cost you. This is the area where you will usually find out about the interest, and the fees that will be applied to the card. Many of the offers you receive in the mail may be for cards with a very low credit limit, and half or more of that eaten away right at the start in fees, and if you don’t read the fine print and use the card, it will be too late, you will be stuck paying for those fees or having your credit ruined with a charge-off.

In credit card lingo, the APR, or annual percentage rate, will tell you what your interest rate on your card is, and how much it will be if you miss a payment or do anything that puts the card into default. Make sure you pay attention to this, and look for a card that can offer you a low APR. Don’t take a card that comes with a high APR, as it will only lead to no good. These cards typically are the fee happy cards, where you use the card once, and because of the APR and other fees that are charged, if you only make your minimum payment you will never see the balance come down. Everything you pay will go towards the finance charges and monthly fees, and in some instances, your balance may go up, even after your payment posts.

You will need to decide whether you want an American Express, MasterCard, or Visa, so you should take some time to read up on the differences between the three. Typically, if you can get a decent American Express, that is the way you should go, as you will be dealing directly with them, rather than a third party lender.

If you do take American Express, you should know that not every merchant accepts it, especially if you will be traveling out of the country. In that case, you would do better with one of the other card types.

There is another card type, but it isn’t nearly as well-known as the other three, Discover. Discover cards come with many benefits, but like American Express, it is not widely accepted as other credit cards. If you only require your card for local use, then you should look closer at the many benefits Discover offers its customers. Remember to always negotiate lower interest rates and play one credit card company against another. In the end you WIN!