How To Pick A Credit Card
Below are some basic tips on picking a credit card. Picking the right credit card can help you save thousands over your lifetime using that card. Ideally, you should try and get a credit card with (1) no annual fee and (2) some type of rewards program. Remember that if you pay off your balance in full and do not have an annual fee associated with the credit card, the credit card company isn't earning any money off of you. That is the ideal way to use a credit card.
Don't pick a credit card just because it offers a zero annual fee. With the exception of airline, poor credit and charge cards, there are many credit cards that offer a zero annual fee these days. Credit card issuers know that a zero annual fee is a big selling point with consumers. Competition among card issuers demands a zero annual fee, so rarely will you find a credit card with an annual fee anymore. What you need to find out is if the no annual fee offer is just for the first year, or is it forever. Many credit card companies might charge no annual fee just for the first year.
Don't pick a credit card just because it offers great rewards or cash back: Credit cards that offer cash back or rebates, such as discounts on future automobile purchases, etc., sound great, but might not be a great deal if they come with a high annual fee, as many of them do and the purchases APR is also high. Too often the rewards are just another selling point for the card issuers, and upon reading the fine print contained in the terms and conditions, one might find quite that the prizes don't come easy. In fact, many credit card companies suspend or terminate their programs before many of their customers ever get to use the accumulated reward points. If someone came up to you and said, "I'm going to make a deal with you. Give me the $500 you have in your wallet now, and three years from today, I'll give you back $20." You would laugh, say "no thanks" and walk away, but consumers naively accept a similar deal with many of these types of credit cards.
Accept a cash rebate card only if it offers a decent purchases APR. If the purchases APR is acceptable to you, and the card happens to offer rewards, too, then it is a good card, but don't let the idea of saving, for example, $500 on your car purchase three years from now, convince you to accept a card with a high purchases APR. If the purchases APR is 24% and you have to maintain a big balance to earn reward points or get cash back, you will incur much more in interest charges than you will ever receive back in cash or future discounted purchases.
Don't pick a credit card just because it has a low introductory rate. Credit card issuers know that low and zero introductory rates are big selling tools because consumers love them. That's why more and more card issuers offer a special introductory rate or "teaser" rate. What is nice for the consumers is that fierce competition among the card issuers are making the introductory rates better and better (and longer and longer). But don't let the introductory rate cloud your judgment. For example, suppose two credit cards offer the following introductory rates: Credit Card A offers a 4.9% APR for six months, then a 11.99% purchases APR.Credit Card B offers a 0% APR for six months, then a 13.99% purchases APR. Your inclination might be to pick Credit Card B with the zero interest for six months; however, if you intend to carry a balance on your credit card for much longer than six months, you should always choose the card with the lowest purchases APR, even if it doesn't offer the lowest introductory rate. Doing so will result in saving you literally hundreds or even thousands in interest charges in the long run if you always carry a big balance on your credit cards. Remember, the introductory rates are only a fraction of the total time the average person holds on to and uses a credit card. From now on when you receive literature from a credit card company offering a special introductory rate, go immediately to the terms and conditions and find out what the regular rates are that kick in after the special introductory period is over before applying for the card. END OF ARTICLE
DO pick a credit card with the lowest APR possible if you routinely carry a credit card balance.
If you are one of the 30 percent of Americans who pay their credit card balances in full each month, the interest rate is irrelevant to you, since almost all cards come with a grace period allowing a period of time to pay the balance in full without incurring interest fees. However, if you regularly carry a balance on your credit cards, the interest rates [the purchases, balance transfer and cash advance APRs] should always be your number one consideration in choosing a credit card.
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