Choosing the best credit card

Credit cards are the ‘money of choice’ for the average American consumer. According to 2004 statistics, there are approximately 641 million credit cards circulating in the economy. Its users embrace the conveniences and other incentives (like airline miles) that credit card providers offer. However, once you have enjoyed the benefits of plastic money, you are also vulnerable to its many pitfalls.

Incurring debt is the most common problem caused by the use of credit cards. This can be attributed to irresponsible use by the consumer, as well as fraudulent practices by the supplier. Since getting out of debt is no easy task, it helps to know how to choose the best credit card.

Know the APR

Although credit card agencies are known for their deceptive tactics, most banking firms provide all the necessary information to clients who want to open an account. However, you should know how to read the fine print and ask questions, because bank documents do not always tell the whole story. Vague conditions and terms have put many users in deep debt just because of their ambiguity.

In choosing the best credit card, one of the most important terms to remember is the Annual Percentage Rate (APR). The APR reflects the cost of credit you accumulate every year. This is the first thing that must be disclosed by the credit issuer. However, the APR can be adjusted because of changes in economic indicators like interest rates.

Is there a grace period?

Just like in the classroom setting, some banks give a free period (also known as a grace period) to their clients. This is a privilege given to clients who want to disburse her/his balance in full even before the date when payment is due. Though this practice may sound assuring at first, some creditors do not give you this opportunity, and may even impose a charge for every transaction you post in your account.

Also, the credit issuer may ask for certain fees, and it is important to know which of them are acceptable and which are not. For instance, annual fees can amount up to $50 for ordinary credit plans. In the case of “gold” or “platinum” accounts, charges start at $75 and can go up to hundreds of dollars. The client may also be obliged to pay transaction fees. This is used when you go beyond your credit limit or when you take out a cash advance through your credit card.

Be protected

There are several laws that protect consumers from rackets and other deceitful acts. One of these regulations is called “prompt credit for payment”. In this directive, the creditor should recognize your account on the same day that payment is accepted. Also, if you have paid your credit card company an amount that is greater than your total balance, you should be able to keep it on your account or ask for a refund but only if it exceeds $1.

Choosing the best credit card is very tasking. But it can be worth your while if you are able to find a credit issuer that fits your needs and makes your financial transactions easier.