Landing the best credit card deal

Whatever credit card you choose, be sure to study its terms and costs before signing on. Here are some key questions to ask.

Does the card have an annual fee? If you're looking for a no-frills, low-rate card offer, there's no reason to pay an annual fee. Avoid cards that charge them. Many rewards cards, such as the wildly popular air-mile credit cards, and some super-high-end prestige cards charge annual fees in exchange for rewards or perks and services. Weigh these offers carefully.

What is the card's APR? The lower the interest rate, the less money you'll pay when you carry a balance. Does the card come with a super-low introductory rate? How long does the teaser rate last? Will you be able to pay off your card balance before the teaser rate expires?

Is the APR fixed or variable? About 70 percent of all credit cards have variable rates. The interest rate on a variable-rate credit card fluctuates with an index. When the index shoots up, so does the card rate. When the index slips down, down goes the card rate.

Some variable-rate card accounts are re-priced each month. Others are re-priced each quarter.

Most issuers use The Wall Street Journal prime rate as an index. That prime rate usually falls the day after the Fed cuts rates. It's been a nice time to be a variable-rate card customer, thanks to the round of interest rate cuts beginning in 2001.

Unlike variable-rate cards, the interest rate on a fixed-rate card does not fluctuate each month or each quarter. So if you sign on for a card with a fixed 12.99 percent rate, there's a good chance you'll be paying 12.99 percent for quite awhile.

But it's important to realize that a fixed-rate card deal could change at any time. According to federal law, issuers must give written notice of rate increases to fixed-rate cardholders a mere 15 days before the new rate takes effect.

Does a variable-rate card offer have a floor? Some variable-rate credit cards come with floors, also called minimum APRs. Once your card hits its floor, that's as low as it goes. Your interest rate won't drop any lower, regardless of future Fed cuts.

How long is the card's grace period? Most cards offer grace periods to customers who pay off their balances each month. A grace period is the number of days after the statement date that you have to pay your bill without incurring finance charges. If payment is made in full by the end of the grace period, no interest is charged. But if only a partial payment is made, interest kicks in at the end of the grace period.

Many issuers have whittled down the interest-free grace periods on credit cards from 25 days to 20. Some credit cards have no grace periods whatsoever. Avoid them.

What are the card's penalty policies? While nobody plans on missing a credit card payment or going over the limit, it's important to realize what will happen if you do.

Penalty rates and fees are on the rise. Some card issuer's policies are quite severe. Be sure to check. Pay careful attention to what will happen if you pay late during a card's introductory period. Will that super-low teaser rate disappear after one little mistake?

Found the card you want? Ready to transfer a balance? Before you do, check for fees.

Some cards charge you a fee for every balance you transfer to the card. it's best to avoid offers with hefty transfer fees.

Continue making minimum payments on your old card while waiting for a balance transfer to take effect, which could take four weeks. If you don't, your old issuer could slap you with a late fee. This Bankrate.com worksheet will guide you through the balance transfer process.