Which Credit Card is Right for You?

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While we maintain that it’s better to pay for things with money you have in your bank account, we acknowledge that most people today have at least one credit card. Whether you keep a card around for emergencies, or keep a running balance from month to month, it’s important to know how to navigate all of the fine print that credit card companies don’t advertise.

Which Type of Card Should I Look For?

First, you’ll need to figure out what you want out of a credit card. Are you looking for perks – like free airline miles, cash back, or other incentives? Perhaps you have had financial trouble and your credit score has suffered. In that case, you’d need to look for a credit card specifically targeted for people with bad credit.

Check your credit score before applying for a credit card so you’ll know what kind of interest rates to expect. The higher your credit score number, the lower your credit card interest rate should be.

If you’re transferring a balance from one card to another in order to save money, beware of cards that offer teaser rates. In most cases where a credit card is offering an unbelievably low interest rate on balance transfers, that super low rate is only temporary, and will skyrocket up after your introductory phase is over. This could be anywhere from 3 months to one year. So, if you’re tempted to move your balance from a credit card with a 12.99% interest rate to a card that offers free transfers and a 3% rate on the balance – get out your magnifying glass and read the fine print!

Many credit card companies make the above (or similar) offers to attract customers who may have a significant balance sitting on a different card with a medium to high interest rate. The other problem with these types of offers, beyond the introductory rate jumping up after a set time period, is that the “free balance transfers” offer itself often has a time restriction.

For example, let’s say you see a commercial for a credit card that is offering new customers “free balance transfers” with 3% interest on said transfer. What isn’t advertised is that many of these offers expire 60-90 days after you’ve signed up. So, you see an ad, apply for the new card intending to transfer your balance from another card, get your new card in the mail, and then…..LIFE HAPPENS. You get busy, and put off making the balance transfer. Several months later (probably while paying bills), you have a light bulb moment – “Oh right! I need to transfer my balance so I can stop paying all this interest!” After all, your new card offers free balance transfers and a much lower rate.

Unfortunately, by the time you remember to make the transfer, the “offer” may have already expired, which means there will probably be a fee on the transfer, and you may not be able to get the super low rate anymore, making the whole reason you switched companies null and void.

Your best bet is to research until you find a credit card with no yearly fee and a low fixed interest rate. This will guarantee you the same interest rate until you’re able to pay off the balance. Also, be sure to pay your bill on time every month, even if you’re only paying the minimum amount. This will help you avoid late fees – and being late with your payments can often cause your interest rate, even if it’s fixed (again: Fine Print) to go up.

 

Image Credit: Sean MacEntee

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3 Responses to Which Credit Card is Right for You?

  1. Pingback: How Can I Remain Financially Stable After a Divorce? | Veitengruber Law

  2. Pingback: How Much is Your Credit Score Costing You? | Veitengruber Law

  3. Pingback: Secured Credit Cards: 101 | Veitengruber Law

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