How to Choose a Credit Card

You have probably received many "pre-approved" credit card offers. As enticing as it may be to sign up, make sure that you examine the fine print carefully before you accept any offer. The Fair Credit and Charge Card Disclosure Act requires credit card issuers to provide certain information on applications. Here are things to consider while choosing the right card for you:

• Annual Percentage Rate or APR: In the case of a variable interest rate, make sure you know when it can change and what determines the figure.
• Annual fee: Some cards expect that you pay a fee each year for being a cardholder; some cards do not.
• Periodic rate: This is the interest rate used to determine the finance charge on your balance during each billing period.
• Finance charges: Most lenders determine the finance charges by using the average daily account balance, or the average of what you owed each day in the particular billing cycle. If you are looking for a credit card, look for ones that use an adjusted balance, as they deduct your monthly payment from your beginning balance. This usually produces the lowest finance charges. Offers that use the previous balance in the calculations of what you owe usually have the highest finance charges. Further, see if there is a minimum finance charge.
• Grace period: This refers to the number of days you are given to pay your bill before finance charges apply. Without a grace period, you may be expected to pay interest from the date of credit card use or when the purchase appears on your account.
• Other fees: Always ask about the fees that may come with a cash advance, late payments, and going over your credit limit. Some companies, however, charge a regular monthly fee.