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Credit and Debt :  Credit Basics

How do you sort through the credit card madness? After all, it's delivered an  average five times per week to your mailbox? The perks. The balance transfers. The lure of low introductory rates that will "expire" soon if you don't take advantage of them. Before you go too crazy, take a breather, and realize those special offers will always be there. They never really expire. They only get extended.

The balls in your court. It's up to you to shop around to get the best deals -- to find a credit card that meets your budget and repayment style.

If you plan on paying your credit bill in full each month, the best type of card is probably one with no annual fee and a longer grace period. If you need time to repay, on the other hand, you'll want to select a card with a lower interest rate. Each situation presents itself differently. And making the right choice can save you money.

Steps to Take

1. Review. Make sure you review each offer thoroughly. Look for any fine print that might be hidden outside the main context of the application.  

2. List. Make a list that outlines the features  and terms of each credit card. This will allow you to easily compare the cards to each other and your needs as well.

3. Fees. These should be disclosed in what's referred to as a Schumer's box (named after a senator). Consider this area the most important part of the application you should review.

Compare the following types of fees:

• Cash Advances
  
  
• Purchases
  
  
• Annual Percentage Rate (APR)
  
  
• Grace Period
  
  
• Application Fee
  
  
• Annual Fee
  
  
• Cash Advance Fee
  
  
• Miscellaneous Fees
  
  
• Late Payment Charges
  
  
• Over-the-Limit Fees
  
  
• Special Delinquency Rates
  
  
• How the rate is determined (variable rate cards)

4. Verify. Call the creditor and verify any information that comes directly from the application. Make sure the offer is still valid and clarify any questions you might have -- such as balance transfers or finance charge computation.

5. Lower. Finally, give your present creditor a call and let them know you've found a better offer. See if they'll match it or even lower your interest rate. To keep your business, many will.


Credit and Debt Calculators:
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•  What will it take to pay off my balance?
•  Should I consolidate my debts?
•  How Much Am I Spending?