The Hunt for the Right
Recently, I have been bombarded
with credit card advertising that promises low interest rates,
lengthy grace periods, no annual fees, cash back, low late-payment
charges, and low over-the-limit fees. However, when I looked closely
at the fine print, I discovered these credit offers were no better
than what I currently have, even if the headlines appear to promise
something better. What should you do to help get the right credit
card for you?
The short answer is that you should
shop around and read the fine print.
Begin by determining the features
that fit your purchasing needs. For example, do you pay off the
balance every month? If you do, then the interest rate on balances
may be less important than the length of the grace period. If
you plan to carry a balance, then the interest rate should become
very important. Check the card’s APR. The APR is the annual
percentage rate you will pay, on an annual basis, if you carry
balances. Make sure the advertised interest rate is not a “teaser”
low-interest rate that moves higher after an introductory period.
Also, check the interest rate closely. Is it fixed or is it variable?
If variable, what is the index?
Next, determine whether the card
is accepted nationally and at the stores you frequent. What are
the penalties if you make late payments? What method is used in
determining your outstanding balance and resulting finance charges?
What is your grace period? Do interest charges accrue right away
or after a certain time period? Can you pay online at a secured
site or must you pay by mail?
After you think you have sorted
through the offers and found the best one, call the card issuer
to verify the publicized information. Make sure, if possible,
that you have the promises in writing. Just yesterday, one western
Wisconsin consumer told me that her son’s credit card was
quite different than promised. Unfortunately, he is now being
charged several fees that she believes were not clearly disclosed
to her son before he applied for—and used—the new
If you already have a credit card
and have a good credit rating, ask your current card issuer to
lower your current interest rate or to reduce or waive your annual
fee. I did this and saved more than $50 per year for a frequent-flyer
Finally, the Federal Reserve Bank
maintains a very helpful credit card survey list at http://www.federalreserve.gov/pubs/shop/tablwb.pdf
You Really Can Eliminate Most Pre-Approved
Credit Card Offers. WECN readers keep asking: How do cut the number
of pre-approved credit card offers that come in your mail? I am
happy to once again give you the answer. The three major credit
reporting agencies have banded together and created a service
that allows you to opt out of receiving most pre-approved credit
card offers for either two years or permanently. You will be asked
to provide some personal identifying information over the telephone,
but this is a legitimate service. Call toll-free, 1-888-567-8688.
You will be glad you did.