When it comes to obtaining a new credit card, you may not have as many choices as people who already have good credit. But you should still do some feshop comparison shopping to be sure you are getting the very best deal available to you. Credit card terms and interest levels vary – and some of these variations can make a huge difference to your wallet. Always shop for the card with the very best interest rate and terms.
Here’s what you should look for in credit cards:
1. Avoid high interest rates. Credit card companies disclose the interest rate in a number of ways, but you desire to look at the Annual Percentage Rate (APR). This is the level of interest, transaction fees, along with other charges that you’ll pay each year, expressed as a percentage. It is the best indicator of the actual interest you will pay.
2. Avoid low introductory rates. Some cards have a minimal “introductory rate” (also called a “teaser rate”). After a few months, the interest rate will skyrocket. Also, sometimes the advertised rate only applies to certain people, such as for example those earning a higher income. The card issuer charges a higher rate to those that don’t qualify – that could mean an unpleasant surprise whenever your first bill arrives.
3. Understand interest calculations. Many banks today charge interest in line with the average daily balance. This is how it works: Say you charge $1,500 on your own charge card and pay $1,200 on the due date. When your next bill arrives, a bank utilizing the average daily balance will charge interest on the $1,500 average daily balance from the previous month, not on the $300 you still owe.
4. Review the grace period. This can be the interest-free period of time between the purchase date and the bill deadline. It is usually available and then those who usually do not carry a balance. If you pay your bill completely each month, be sure to have a grace period. Otherwise, you’ll pay interest from the date of one’s purchase. In the event that you carry a balance, a grace period is not important.
5. Avoid high annual fees. Some credit card companies charge you a flat fee (along with interest along with other charges) for utilizing their card. Some do not. If you pay off your balance each month, you want a card lacking any annual fee. If you carry a balance, a card with an annual fee but a minimal interest rate may be much better than a card without annual fee but a higher interest rate.