Chalana Williams, First Federal of Lakewood
A credit card can provide you with the financial freedom you need to make larger purchases and quick buys when you do not have cash handy. However, credit cards can also saddle you with mountains of high-interest debt. The key to using credit wisely often lies in choosing the right credit card for your needs. There are a host of factors that you should consider before signing up for a credit card.
Interest rate
Usually expressed as an annual percentage rate, the interest rates on most consumer credit cards range from 12 percent to as high as 25 percent. Interest rates kick in when you do not pay off your credit card’s balance each month. If your card’s interest rate is high, the amount of charged interest can soar quickly, so it is important to find the lowest interest rate possible if you are likely to carry a monthly balance on your credit cards.
Penalties
Credit card companies often charge a host of fees. Your card might charge an annual fee that you’ll have to pay every year, charge an application fee when you apply, or charge a set-up fee after you open a new account. If you use your card for cash advances, most cards will charge you every time you use them to get cash. All cards will charge you penalty fees if you pay your bill late or make purchases that put you over your credit limit. Also, read your card agreement carefully; some credit card companies reserve the right to boost your low-interest rate to one as high as 29.99 percent if you do not pay your bill on time.
Special offers
Some credit cards come with special offers and incentives. Cash-back cards, cards that earn airline miles, or cards that give you gifts for racking up enough points are all popular reward cards currently. Rewards cards are enticing but can also be dangerous. Make sure that any rewards card for which you sign up doesn’t come with high fees or interest rates and make sure not to overspend with these cards in an effort to rack up more rewards or cash-back bonuses.
Credit card shopping
Shopping for the right credit card is no easy task. Do your research and look into customer agreements, interest rates, fees, and incentives for of a wide variety of credit cards online before making a choice.
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