Signing up for
a credit card can be a major financial
decision; if you don't do your homework it can
end up costing more than it's worth. When
you're shopping for a credit card, study the
numbers. You'll want to find out about the
Interest Rate, annual fee, grace period, and
more. Consider the following questions before
deciding on any credit card:
- Is there an
introductory rate? How long does it last?
Does it apply only to purchases, balance
transfers, or both?
- When the
introductory rate ends, what will my
long-term rate be?
- Is there an
application fee or other processing fees
when I sign up?
- Is there an
annual fee? Is it possible to have it waived
the first year?
- What kinds
of penalty fees apply? Are there late fees,
over-the-limit fees, or balance transfer
fees?
- When and how
will my variable Interest Rate be changed?
- What is the
grace period before interest charges apply?
- How will the
company inform me of any changes in the
contract, such as changes to the Interest
Rate and other cardmember benefits?
Be honest
with yourself. What are your actual
financial habits and credit needs? The way
you plan to pay your bills is important when
it comes to choosing a card. Carrying a
balance every month, instead of paying your
balance in full, can drastically change what
you are shopping for. Likewise, the credit
limit, rewards programs, and other
cardmember benefits you apply for require
thoughtful consideration. Don't pay extra
for anything you can't use, and don't
over-extend yourself financially - it can
lead to major problems later on.
When shopping
for a credit card, you may be overwhelmed
by the number and variety of options
available. There are bank cards, store
cards, affinity cards and more all
offering various interest rates, rewards,
and special programs. There are different
cards for every credit level and financial
situation. But which is the right card for
you?
Consider your credit situation
Do you have good credit? Never been late on
a payment? Pat yourself on the back and
apply for one of the many low-interest,
premium-level (platinum or gold cards), or
reward/rebate cards available to those who
have earned card-issuers' trust.
Consider your spending habits
Will you be running up large bills and
carrying a balance? A low-interest card is a
must-have. Will you be using your card often
but paying off your bill in full each month?
A rewards card can be a steal when you're
not paying interest! Do you have difficulty
handling your credit responsibly? Aim for a
card with a lower credit limit, such as a
student card or secured card, which can help
you learn good habits without the danger of
incurring excessive debts.
Compare, compare, compare
Two cards with the same attractive interest
rate can have vastly different fees and
other costs. One card may offer rewards or
perks that are appealing to you, while the
other offers only credit. Think about other
services you may need, such as cash advances
or balance transfers. Some cards offer more
favorable terms for these kinds of
transactions than others. Cards marketed to
people with less than perfect credit can
also have hefty fees, which add up quickly.
Make sure you choose a card that is worth
what it costs you. You should also consider
whether the credit limit is high enough, how
widely the card is accepted, and the plan's
other services and features.
Most Importantly
No matter what kind of card and plan you
choose make sure you understand the terms of
your credit card agreement. If there's
anything you don't understand, call the card
issuer for answers to your questions. Know
what you're getting into!
The paper
trail:
- Keep
thorough records of all your online
transactions. This should include the
company's name, address, phone, URL, and
email address; any shipping dates or
information provided by the merchant at the
time you ordered; the date you placed your
order; a copy of the order form and/or
confirmation; any other communications
you've had with the merchant, and any other
specific information relating to your
purchase. Check your email regularly for any
shipping or other information merchants may
send you regarding your purchases.
- Review your
monthly credit card and bank statement
carefully. Check off purchases against your
monthly statement to be sure that no
fraudulent or incorrect charges have been
made. Immediately report any unknown charges
or errors to the appropriate credit card
company or bank.
- Keep a
complete list of all your credit cards,
their numbers, and the emergency contact
phone numbers. Store this information in a
safe place. You'll need this information to
report lost or stolen cards.
Early credit
card use
The first recorded use of credit cards in the
United States occurred in the early 1900s,
when individual department stores,
communication companies, hotels and other
travel companies, oil companies, and various
other businesses began issuing small metal
cards to their preferred customers. These
cards, sometimes called "metal money", offered
customers an interest-free, deferred payment
option. Unlike today's cards, customers could
only use their "metal money" with the company
or business that issued the card.
Universal credit cards emerge
In the mid-60s Bank of America began licensing
other banks across the nation to issue
BankAmericards, allowing smaller banks to
offer expanded services to their local
customers. Master Charge followed suit, and by
1969 almost all independent bank charge cards
were licensed through either BankAmericard or
Master Charge. To facilitate international
expansion, BankAmericard changed their name to
Visa in 1976. Master Charge followed by
changing their name to MasterCard.
|
Credit
Card Categories
