How To Effectively Evaluate Credit Card Offers

Make The Best Choice By Considering A Few Key Points

There are a multitude of credit cards available out there with a wide range of benefits and costs to consider. Whether you’re ready to rack up some free air miles or simply want to get started building your credit as a student, there is a card out there that will match your needs. The trick is to read the fine print, and spend some time carefully considering exactly what your card can do for you.

Mind Your Interest Rate

• Typical interest rates will vary depending on the card type, however you can usually count on an interest rate of about 18.5% or more. Status cards including platinum and gold cards along with retail cards can carry a higher interest rate in exchange for benefits.
• Low interest rate options are often available for those who do want to carry an ongoing balance. Typically you can look through all the credit card options available from a provider to find out whether they have lower rate versions available. Although there may be an annual fee on this type, it may be compensated for by the reduced interest. Do not be tricked into believing you won’t qualify for a low rate card.
• Introductory interest rates are often available with new cards, and can be invaluable when you have an existing credit card balance. If you are able to pay off the entire balance within the introductory period this is an excellent option. Check out the “after” rate – once the introductory rate has ended you may find the regular interest rate is high.And if you have an existing balance don't be afraid to call a provider and ask if they can offer you a 0% introductory rate on a balance transfer.
  

Graceful Credit Card Use

• A grace period is the period in which you don't get charged interest on your principle. So if you purchase items and pay the balance in full before the grace period is over, you can avoid paying interest on your purchase. Read the fine print of your credit card offers to find a longer grace period.
  
• Typically a grace period is about 25 days, but may be shorter. Your grace period for cash advances might be slightly different than purchases as well, so look closely. Finally, you may find with some cards that new purchases will have an entire billing cycle as their grace period. In other words, you won't pay interest on the new purchase for an entire month. Check whether your credit card terms say "average daily balance excluding new purchases" to see if your card offers this.
  

Reap The Rewards

• Air miles are easy to collect and can be applied later to any travel you might be doing. If you frequently travel by plane the free miles might be a great bonus to you. Be sure though to check details for fine print such as blackout dates and eligible airlines. You don’t want to find out all those collected airmiles are never available when you actually need to make a trip. Depending on the card you might get airmiles with no restrictions at all.
• Discounts at your favorite retailers are another sweet little bonus when you are out shopping. Take a look around to see where you're eligible to save with your credit card. There’s nothing better than finding out the gadget you need to buy anyway is half off simply because you used your credit card.
• Member only benefits other than discounts are often part of retail credit cards. You could gain access to members only appreciation nights, or advanced notice of upcoming sales. Sometimes it’s worth it to join the club!
• Other partner benefits are available, especially for the higher end travel reward cards such as gold and platinum options. You could qualify for free travel insurance, complimentary taxi service when you’ve returned from your trip, or increased purchasing power and extended warranties. Look for the extras – you’re worth it!

Avoid The Penalties

• High interest may kick in if you are ever late or miss your minimum payment. Plan carefully and consider setting up automatic bill payment.
• Late fees may also apply when minimum payments are overlooked. Check out the fees in advance, and then avoid them if at all possible!

And How Will They Affect Your Credit?

• Obtaining a new credit card will increase the ratio of available credit to used. That is, you’ll have more credit available to use up, and therefore less of your credit is taken up. This can look good to lenders and increase your credit score.
  
• Be sure when you switch to a low-rate card or get a 0% introductory rate by transferring your balance that you do not close your existing credit card account. Although it's great to pay off your existing card, the longer you have a credit account open and take care of it properly, the better it looks to lenders. Just put your old credit card up.
• Too many applications in a short period looks bad to lenders, so don’t fall into the trap of accepting that pre-approved card or introductory rates one too many times. You don’t want to appear as if you’re burning through your credit and applying for more. With some planning you can accept the benefits of a great card the first time.