There are many things you should keep in mind when thinking about the different types of credit cards that are available to you. You should think about how you will use the credit card and why you need the card. You also should consider what the annual percentage rate (APR) and fees are, and if you plan to pay your debt each month or if you plan to keep a balance.
If you plan to pay your bill in full each month, you won't have to worry about many fees or the APR. If you need to carry a balance, on the other hand, you will have to figure out where you will come up with the extra money to pay finance fees and accumulated interest from the APR. It's also important to ask yourself if you plan to use the cash advance option on your card, and if you can repay that money plus any fees that are associated with it. You must ask yourself these questions because credit cards are a significant responsibility and should not be taken lightly.
You need to ask your creditor what the terms are of your credit card and what the APR is. Many cards factor in an APR when you have late fees, purchases, cash advances, and balance transfers. This is only a brief checklist about the terms and questions you should keep in mind when working with your potential creditor. There may be other questions and issues that you'll want to consider when using a credit card.
Interest
Interest is a very important term to understand. The rates can change dramatically based on your credit score and how you pay your bills. Some creditors have tier rates, fixed rates, and variable rates. The fixed rates may be a better option for you.
Grace Periods
You must understand what a grace period means. The grace period is the amount of time that you have to pay your balance without accruing charges. If you go over your cycle, your creditor may charge you finance fees, additional interest rates, and penalties. You should ask your potential creditor if the balance carryover has penalties and what those charges will be. Also ask if you will receive any benefits for paying your balance in full each cycle. You also should ask if there are penalties on cash advances.
Finance Fees
Learn all you can about the finance fees on the credit card that you would like to have. Credit cards often include fees for advances, fees for late payments, and fees for other miscellaneous charges. You should ask several questions about finance fees. These questions should include about whether the lender estimates fees by a one or two cycle, if the fees are adjusted, or if the fees are standard. You also should ask if the there is a minimum finance charge per item and what that charge is.
Charges
Ask if the card has additional fees besides the finance charges. Those fees may include late charges, credit limit override fees, late charges, and setup fees.
Cash
Ask your creditor about the amount you can borrow and what fees you will have to pay for using a cash advance.
Type of Credit Cards
You need to know what types of credit cards are available. You should ask if they are standard cards, or if they are secured cards, Premium cards, or ordinary unsecured cards.
Credit Limits
All credit cards have some type of credit limits. There are no exceptions; the credit limit is usually determined on an individual basis. If you have excellent credit, for example, you usually will receive a large line of credit. You should always know what your credit limit is and make sure that you are not going over your credit limit.
Perks
Many credit cards offer cardholders various perks or benefits. These may include cash rewards, airline miles, gift certificates for online retailers, and other rewards for good credit ratings. This gives cardholders the ability to avail of 0% apr or to get some of their money back from using the card. Make sure that you know the details of your awards program. The details will change from creditor to creditor.
Insurance
Check to see if there is fraud insurance for your cards. This insurance will cover your costs if there are charges on your card that you didn't make. Ask your potential creditor how much protection you have and how much you will have to pay if your cards are lost or stolen.
