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 dealThe 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?
You can also take your balance at a card company charging you a high interest rate and transfer it to another company with a lower rate.
Card perks may cost youRemember to balance your numbers. Credit cards offer perks and kickbacks and they may just have something perfect for you -- and that can balance out a higher interest rate. If you don't intend to carry a balance for long, you may want to choose a card that offers these rewards even though the interest rate might be a few percentage points higher than another card.
Card issuers may offer additional options. Some are valuable and save you money. Some aren't and don't. Some may be added automatically and give you no choice, some you may have to ask for, some you may be able to turn down. Some you may agree to without knowing it if you don't read all the fine print in your deal or your monthly card statement.
Popular options commonly include:
- Cash rebates on certain purchases (or in some cases all purchases).
- Purchase protection -- a sort of insurance for what you buy with the card.
- Discounts on a lot of good and services.
- Insurance on such things as travel or auto rentals.
- Frequent-flier miles.
What if you're preapproved?Preapproved means little. It simply means the card company is aware of your credit history and standing. It doesn't automatically give you any special rates or breaks when it comes to the terms and costs of the deal. And the small print will generally give your card company the opportunity to change the deal you were preapproved for.
Once you've got the card, monitor your statements closely and make sure you aren't throwing out important account information with that junk mail in the statement envelope.
Be sure you know what you owe, what you've paid and where you stand. Otherwise it's easy to have trouble build up and one day surprise you. Or you may simply miss the chance to get an even better deal.