Comparing Credit Cards

Most people don't realize their credit card has an annual percentage rate (APR) of 13% or higher. A lot of consumers get sucked in by offers from credit card issuers with low introductory interst rates. The special rates are typically only valid for the first 6 months or sometimes shorter than that.

Don't you wonder how credit card companies can afford to offer those free plane tickets and rewards? They make money from the account fees such as annual fees, late fees, financing fees and interests.

What to look for?
Don't compare just the annual interest rates or rewards when comparing credit cards. Factor in all the aspects of a credit card and the costs. Read the fine print and make sure you understand how long the intro rate is good for. Understand what the balance applies to, sometimes the intro rate is only good for balance transfers from other cards. Also, some card companies actually increase the interest rate if you are late on one payment. Don't forget to keep in mind that credit cards often have a minimum finance charge as well.

The Fees
Credit card companies have a good amount of fees, but here are the ones that most have:

• Annual fees - There are cards without annual fees, so try to go for those first.
• Late fees - Credit cards will have late fees. This charge is usually 20 to 25 dollars minimum plus whatever the interest financing charge amounts to.
• Foreign Transaction Fees - Almost all cards will have a foreign transaction fee. They can just be either a % of each charge or a flat transaction fee for each usage.

Credit Cards Helps Your Credit
Don't be scared by credit cards. Credit cards can actually be your friend. Having 1-3 credit cards open for a few years with no late payments will help you when you apply for a mortgage or auto loan. It shows banks and lenders you are able to pay off your monthly bills.