Summarize the following:
Make a decision based on what it is you plan to use your credit card for. There are many different kinds of credit cards. Here are just a few: Standard credit card. Do you want a card to increase your monthly buying flexibility? Maybe you're just tired of handing out cash or going to the ATM every second day. These credit cards come unsecured, which means that you don't need to put down a security deposit to prove you can pay your debt off. Rewards credit card. Do you want to earn rewards with a specific retail store, gasoline company, or airline so that you can redeem your points for clothes, mileage, or vacations? Business credit card. Do you need to open a line of credit for your fledgling small business? Business credit cards come with special bonuses that might appeal to a business owner. Figure out which type of card is best for you by what their interest rates are and what specific benefits the company offers before choosing one. Some things to keep in mind include: Annual Fee - Many companies charge between $15 and $50 for use of their card. This fee can sometimes be waived if you are a frequent user of the card, transfer a specific balance to the card, or, sometimes, just for asking! Annual Percentage Rate (APR) - APR is how much money in fees and interest you can expect to pay on top of the principal that you borrow. If you pay $50 in fees and interest after spending $500, your APR would be 10%. Your APR can be either a "fixed" or a "variable" (floating) rate. Fixed rate generally are a little higher, but you will know what to expect each month. Variable rates are based on a current published index coupled with an additional percentage. Grace Period - This is the amount of time between when your transaction is posted to the account and when interest begins to be charged to it. This is usually 25 days from billing time, unless you carry a balance. Late, over-the-limit, and account setup fees - Most companies charge you late fees (for paying your bill late) and over-the-limit fees (for going over your credit limit), but it is very rare for a company to charge an account setup fee. Your credit score is a score on a scale from 300 to 900, with 900 being the best. This number is used to express an individual's creditworthiness, or how likely s/he is to repay a debt. 650 is an "average" credit score, while anything above 700 is considered great and anything below 620 is considered poor. Your credit score will affect your ability to get a credit card. Studies show that people who use credit cards tend to spend more than people who use cash. Scientists think that the experience of parting with real money in real time is fundamentally different from the experience of pledging to part with real money at a later time. Scientists also know this: people who buy a laptop, say, with a credit card are less likely to remember details about its costs than people who pay for the same laptop with paper currency. Finally, you don't need a scientist to tell you that getting a credit card means giving yourself the opportunity to buy something you can't afford. This is not necessarily a bad thing, but, for financially irresponsible people, it can have devastating consequences. Locate online applications or a hard copy of an application and look over the information on interest rates, grace periods, penalties, and rewards. The abstract information credit card companies publish can be a lot different than the nitty-gritty stories told by people who have actually dealt with those credit card companies in real time. As mentioned above, some credit cards come with miles that you can use on flights and other incentives. Some credit cards, however, give out reward points only after you spend a certain amount, making the deal a little less sweet. According to the federal government, about 46% of American families carry credit card debt. Since people who sign up for rewards programs tend to spend more money than credit card users without rewards programs, it's probably best for individuals with high debt loads to stay away from rewards programs. In any case, do not let the promise of rewards drive your spending. This is what the creditors count on, so don't fall into this spending mode.Instead, consider the rewards as a bonus or surprise which may help to defray the cost of purchasing on credit. For example, if a credit card offers cash back rewards for gasoline purchases made using their card, it might make sense to use that credit card for all of your gasoline purchases, but not to change your spending habits. In the end, using this strategy, your gas purchase price will have been reduced.
Decide what type of credit card is best for your needs. Look at rates and benefits. Know your credit score. Be mindful that having a credit card may encourage you not just to spend more money, but to spend more money than you actually have. Find information on the credit cards you're interested in applying for. Browse online reviews on customer service for the credit card(s) you are interested in. Check out rewards offered with different cards.