Top Tips for Choosing the Right Credit Card

You’ve probably received at least a couple of those pre-approved credit card offers in the mail with those fabulously low introductory interest rates. You are urged to accept before the offer expires. Here is tip #1 Make sure you really are getting the best deal.

Read all of the credit card terms. Don’t believe everything you read in the big print. You will want to read the fine print and calculate your overall costs. Compare terms and fee structures to other credit cards that need to be disclosed on the application even if it is in the really tiny print. Here are things to check

1. Annual Percentage Rate – This is also called the APR. This is a measure of the actual cost of credit which is expressed as a yearly rate in a percentage. It must be on all account statements. The card holder might also be allowed to change the rate called variable rates. Interest rates on credit cards can vary from as low as a couple percent to over twenty percent so it defiantly pays to shop around. You also have to watch for cards with variable rates which start out low and then within 90 days take a huge jump.

2. Free Period – This is also called the grace period and it is the period in which you will not be charged any finance charges if you pay the entire balance off by the due date. It is very important to know whether the card offers a grace period. If there is a free period the card issuer has to mail the statement 14 days before the due date.

3. Annual Fees – Some credit cards offer a reduced interest rate but charge an annual fee. You’ll want to do your math to make sure it’s still a deal with the yearly fee. These cards are sold like a membership. You might get special points that build towards a new car or perhaps a trip. Generally you also get a reduced interest rate. Some cards offer travel insurance as part of the. You’ll want to read the fine print to see exactly what’s being offered.

4. Transaction Fees – These charges must be included in your contract and show broken down on your statement. They can be for things such as late payment, cash advances, or when you go over your credit limit.

5. Other Costs – Terms vary among the cards so when shopping around think about how you are going to use the card then choose appropriately. That way you will get the card that best fits your needs.

It is important that make sure you understand the terms of the card. You also should hold onto all receipts for expenditures so that when your statement arrives you can reconcile to make sure the charges are correct. These days with many cards having online access it’s much quicker and you no longer have to wait for the statement to arrive.

When you are using your card make sure you are doing your part to protect the numbers. On charges where there is a line for additional charges or tips make sure you draw a line with a zero through it.

Always keep your records stored safely away. It should include information such as account number, when the card expires and the telephone number of the card issuer. Take the cards with you only when you are planning to use them. Otherwise store safely at home.

It is always best if you use your cards and pay them off at the end of the month. Letting charges build is when users run into trouble as the interest builds.

Now that you’ve got some great tips for choosing the right credit cards the next time you get one of those too good to be true offers you’ll be better prepared to decide if it really is such a great deal।

Andy Gorton is the founder of Debt Advice Online, who provide Debt Management and IVAs to UK Residents