Choosing Credit Cards

Credit Card Terms

Credit terms and conditions affect your overall cost so it would be a good idea to compare terms and fees before you agree to open a credit or charge card account. The following are some important terms to consider that generally must be disclosed in credit card applications.

Annual Percentage Rate

The APR is a measure of the cost of credit, expressed as a yearly rate. It also must be disclosed before you become obligated on the account and on your account statements. Many credit card companies will offer you a low APR to get your business.

Some credit card plans allow the issuer to change your APR when interest rates change. These plans are called "variable rate" programs. Rate changes raise or lower the finance charge on your account.

Free Period

A free period (also called a grace period) lets you avoid finance charges by paying your balance in full before the due date. Knowing whether a credit card gives you a grace period is especially important if you plan to pay your account in full each month. Most credit card companies offer a 25 day free, or grace period in which to make your payment.

Annual Fees

Most issuers charge annual membership or participation fees. They often range from $25 to $50, sometimes up to $100; "gold" or "platinum" cards often charge up to $75 and sometimes up to several hundred dollars. A good of place where you may be able to get a Platinum Credit Card with no annual fee is Bank of America.

Other Costs and Features

Credit terms vary among Visa and Mastercard issuers. When shopping for credit cards online, think about how you plan to use your new card. If you expect to pay your bills in full each month, the annual fee and other charges may be more important than the periodic rate and the APR, if there is a grace period for purchases. However, if you use the cash advance feature, many cards do not permit a grace period for the amounts due, even if they have a grace period for purchases. So, it may still be wise to consider the APR and balance computation method. Also, if you plan to pay for purchases over time, the APR and the balance computation method are definitely major considerations.

Receiving Credit Cards

Federal law states that it is illegal for credit card providers to send you a card you didn’t ask for. However, Visa and Mastercard credit card issuers can send you a renewal or substitute card without your request. They also may send you an application or a solicitation, or ask you by phone if you want a credit card and if you say yes, they may send you one.