Before signing up for the first low-rate offer
that comes your way, shop around. Maybe that great rate only lasts
six months or the annual fee eats up any savings you could enjoy
from the low introductory rate.
Do a little comparison shopping and you might find
a card with the same rate for at least a year or another card with
the same deal but no annual fee.
An essential tool for finding the best card is the
card search engine. It's a great reference and comparison tool.
Keep it handy as you keep refining your choices.
If you've had your card for a while, shop around again
because now there may be a new deal with the same card company,
or a different, better arrangement out there with another card company
that wants your business.
Cards may come with either a fixed rate or a variable
rate of interest.
Balance all the numbers
Experts commonly suggest that a low, fixed-rate credit card is better
than a low, variable-rate credit card. Card companies can raise
their fixed-rate cards when interest rates go higher, but change
is not automatic and they need to give you 15 days' notice. With
a variable-rate card your rate can move regularly and without any
Rule of thumb: A low, fixed-rate
card is better than a low, variable-rate card.
Information like that -- when a card company can raise
your rate -- is often buried in mail they send you. So always be
careful: that may not be useless promotional/advertising junk you're
throwing away from your credit card company's envelope. It may be
important. For example, it may be a notification that your fantastic
rate triples the first time you're late with a payment. The same
advice applies not only when you're searching for a card, but after
you get one -- check out all that "junk" mail in your
statement envelope before you toss it.
Be sure you are aware of your payment profile, because
the way you plan to pay your bills is important when it comes to
choosing a card. Paying every cent every month (instead of paying
just a part of it) changes what you are shopping for.
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 there 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)?