Financial Education: Charge It Right

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Credit Card Shopping

Shopping for Credit Cards

Not all credit cards have the same terms. This can be confusing when you are shopping for credit cards.

Here are some important credit card terms you should look for.

Annual Percentage Rate or APR: The APR represents the rate of interest you are charged plus fees, expressed as a yearly rate. If you plan to keep a balance on your credit card account, you want to look for a low APR. If you expect to pay your bills in full each month, it will be more important to compare the annual fee and other charges.

Fees:Check how much you will pay for annual fees, late fees or over-the-limit fees.

Grace period:The grace period is the number of days you have to pay your balance before a creditor starts charging interest.

Balance computation method: This will determine how your interest is calculated. There are a variety of methods. The most common is the average daily balance.

Sample Disclosure:

Annual Percentage Rate (APR) 19.4%
Grace Period 25 days
Annual Fee $35.00
Minimum Interest Charge None
Method of Computing the Balance for Purchases Average Daily Balance
Late payment fee - $29.00; Over-the-limit-fee - $29.00; Returned check fee - $20.00; ATM transaction fee - $2.00. The grace period does not apply to cash advances. The annual percentage rate for cash advances is 19.9%.

It is important for you to understand these credit card terms.

Interest rates can be fixed or variable. Fixed rate means the interest rate will not change. Variable rate means the rate can increase or decrease. You need to understand how your payment is affected by the interest rate.

When looking at different credit card offers, use this Comparison Chart so you can compare each offer side-by-side.

When shopping for a credit card, consider the following:

You should now recognize some of the terms to look for when shopping for a credit card. Next, let's look at how to apply for a credit card.