5 Things to Know Before Choosing A Credit Card

Written by on June 13, 2012 in Money - No comments | Print this page

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credit cards are dangerous to those that aren't careful

It is hard to find a person that doesn’t have some form of credit.  With many businesses, like hardware stores and gas stations, offering their own form of credit and free credit card offers pouring in through the mail a person has many options to get credit.  Some would say too many options to get credit.

There is a lot of variation when it comes to these credit options; things like interest rate, balance transfer, annual and usage fees, late penalties, and repayment terms all differ greatly.  That is why it is very important to be informed when choosing a credit card.

Understanding these 5 steps can save a lot of money, time, and headaches in the future.

  • Find a credit card with a low interest rate and a low balance transfer option (preferably 0%).  Then transfer any high credit card options on to it.  This has two benefits this will lower the interest rate being paid on the credit card.
  • It is very important to find a card with a grace period on late payments.  Often credit card companies will raise interest rates after a late payment.  It is nice to have some grace period of a month or more before that occurs.  Some credit card will back date the increased rate on past orders.  When that occurs it can easily turn a 0% intro offer into an unmanageable debt.
  • Find the credit card with the lowest annual fee possible.  With even average credit it should be easy to find a credit card with no annual fee.

  • Investigate the companies that you are going to get your card from.  There are many fly by night companies out there many try to have names that are similar to legitimate companies, always do some investigating before applying for a card.
  • Always read the fine print.  Companies have existed that have raised the minimum monthly payment to 5 times the average regular payment, legally making the card holder pay for far more than they had purchased.  Larger more legitimate companies might not be that deceptive, but the card holder should still read and understand any agreements or applications that they sign.

Danger lurks everywhere when dealing with credit.  Many financial coaches say avoid debt at all cost, and that is sound advice but not practical in the real world.  If you are careful and follow the 5 guidelines above you should be safe while still having access to credit.

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About the Author

Matt Brand

Matt Brand is QLR's money saving expert. His experience with credit cards and student loans have made him take a strong interest in personal finance, saving money and sharing his knowledge. He is passionate about teaching others how to avoid the trap and make smart financial decisions. View all posts by Matt Brand.