Be honest with yourself
Get real. You may say you'll pay off every statement
in full every month, and you may even promise
that you'll have a zero balance by the time the
teaser rate expires -- but will you? Unless this
is your credit history, don't make promises to
yourself you can't keep. Because if you don't
do what you said you'd do, you may be stuck with
a very, very expensive card.
Make sure you confirm with a company that they are offering
what you think they are offering. It's very easy
to misunderstand some of the arcane information
in the small print. Go over it with them, then
ask if they can do better -- their best offer
may not be the first deal they offer you.
Understand key numbers before you sign: What is the
APR, annual fee, grace period, penalties, late payment charges,
over-the-limit fees and interest rates on any cash advances, and
under what circumstances can the card company change your interest
rate (or any other terms of the deal)?
Don't plan to rely on your credit card as a source of cash
advances. You should only get cash advances when
it is absolutely necessary because they usually
come with higher interest rates.
Annual fees aren't things you ordinarily want on a
credit card. But in cases where you intend to carry a balance, you
may want a card that has an annual fee. That's because it may offer
substantially lower interest rates.
APR alone doesn't make the
deal
The interest rate you pay (best calculated as an annual percentage
rate) may not by itself determine if you have the best deal. The
way that APR is applied to outstanding balances can vary -- and
that can mean more, or less, comes out of your pocket to pay for
the luxury of borrowing money. Penalty fees or other additional
charges (e.g., annual fee, late fee) also need to be figured into
the value of any deal. For example: If you know your credit history
and you know that, despite your best efforts you're going to be
late a few times with the payment, use a calculator to see if a
card with a slightly higher interest rate but lower late fee might
be a better deal.
But the lower the rate, the more you save on the finance charges
that are applied to outstanding balances. You
should look for credit cards that offer a low
intro rate (usually for at least 6 months). But
be sure you know what happens when that introductory
(or "teaser") rate expires. What is
the new rate? Does anything else in the deal change
apart from the rate?
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