Are You Applying For A Credit Card 5 Things You Really Need To Know

Are you applying for a new credit card for the first time? You can find that you do not have as many choices as people who have already demonstrated a good credit rating. All the same you can still benefit by doing some comparison shopping to be sure you are getting the best deal that is available to you. The terms and interest rates offered on Credit Cards vary and sometimes these variations can make a very big difference to your costs. So it makes sense to always shop for the Credit Card with the best interest rate and terms.

Here are five things that you should look for in a credit card before deciding on which one is right for you.

1. Be sure to avoid high interest rates. The Credit Card companies disclose their interest rates in several ways so it can be very confusing, but they all have to show the Annual Percentage Rate (APR). This is calculated by taking into consideration all the costs, not just the amount of interest, but also transaction fees, and other charges that you may pay per year on your credit card and expressed them as a percentage. This is the best indicator of the overall cost you will pay on any particular card.

2. Watch out for low introductory rates. Some cards have a low initial rate sometimes known as a teaser rate. After a few months once the preferential introductory rate is over you will find that the interest rate on your card will skyrocket. Another trap that you could fall into is that sometimes the advertised rate only applies to certain people, such as those earning a high income. The Credit Card company charges a much higher rate to those who don't qualify which could mean an unpleasant surprise when your first bill arrives.

3. Understand how the interest calculations on your Credit Card work. Today it is a common practice for some banks to charge interest based on the average daily balance. This is how it works: Say you charge $1,500 on your credit card and pay $1,200 on the due date. When your next bill arrives, a bank using the average daily balance will charge interest on the $1,500 average daily balance from the previous month, not on the $300 you still owe.

4. Make sure you get the best grace period. This is the interest-free period of time between the purchase date and when the bill has to bee paid. It is usually available only to those who do not carry a balance. If you pay your bill in full each month, make sure you have a grace period. Otherwise, you'll pay interest from the date of your purchase. If you carry a balance, a grace period is not important.

5. Watch out for high annual fees. Some credit card companies charge you a flat fee (in addition to interest and other charges) for using their card. Some do not. If you pay off your balance each month, you want a card without an annual fee. If you carry a balance, a card with an annual fee but a low interest rate may be better than a card with no annual fee but a high interest rate.

By taking these five tips into consideration you will be well on the way to getting a good deal when you apply for your Credit Card.


Note: The information given in this article was correct at the time it was written. However, the author does not guarantee the correctness and completeness of this information at any time. The Credit Card Market is constantly changing and you should make sure you check for the latest rates and terms before applying for any credit card.