Who hasn’t received a pre-approved offer of a credit card in the mail? They try to make you feel like one of the chosen few and you pause and wonder what you did to receive such an honor. They also warn that this offer has time limits, so you must hurry to take advantage of the offer or risk losing this wonderful opportunity altogether. But be forewarned! Those offers usually come with a price attached, so do your homework before you jump into any of these commitments.
One of the important things to consider before opening a credit card account is the annual percentage rate of the card. Some cards also have a periodic rate which is applied to any outstanding balance at the end of each month. Some card companies will offer a variable rate that will fluctuate with the rate of interest or stock market values. You need to know that the rate may change and how that rate is determined.
Some companies will offer a grace period whereby you will avoid any charges if the pay the account in full at the end of each month. It is important to find out if the card issuer has a grace period if you plan to pay off the balance each month or you may end up with a charge whether you use the card or not. The issuer must mail the bill fourteen days in advance to allow time for payment to be sent.
There can be yearly membership fees that range in price from 25 to several hundred dollars; to get a gold or platinum card will often cost up to 75 per annum. You may also have transaction fees for cash advances, late payments or for exceeding your credit limit. You will need to consider if the credit limit is high enough and how widely accepted the card is.
When applying for a credit card shop around and compare terms and fees. Make sure you fully understand the small print before you commit. Once you have made your choice, keep your receipts to compare with the bill when it arrives. Protect your card and account numbers to prevent theft and unauthorized use. Keep your records in a safe place, such as a filing cabinet, along with account numbers and phone numbers to report lost or stolen cards. And finally, don’t have more cards than you will use as this increases the risk of having a card lost or stolen, and the chances are, if you don’t use it very often you won’t miss it until it’s too late.
