Demystifying the Credit Card Jungle

If you are someone who is getting credit card offers on a daily basis then you know at least what they look like and that some of them have better rates than others over the long term. Because you get an offer though, it does not mean that you will actually get the card.

Most companies will send these offers out to entice people that might fit their credit criteria to get the card. Often when people do get the card the interest rate is so high that it is impossible to keep up with the payments.

However if you have more information you can be sure to pick your card wisely.

Check Out Their Credit Requirements

When you get that credit card offer, check to see the interest rates and the penalties you will get if you use the card. Sometimes you will find that they have severe penalties for not using the card or for not paying on time. This is good to know before you activate your card.

Interest Rates

There are many different interest rates and they are usually determined by the type of credit rating you have. For example, you will get a better interest rate if you have excellent credit than if you do not. When you wan to check the interest rate that the credit card offer has, turn to the instructions and see the APR which is the Annual Percentage Rate. This will tell you how much you are going to have to pay in interest when you use the card.

When your credit is good, the credit card companies will lower your rates for a period of time to entice you to take their card over someone else’s. They will also let you bring your balance to their card in hopes that they will earn more interest.

Annual Fees

Some credit card companies charge an annual fee to use their credit card. As an example, you may have an annual fee of $39 to $99 depending on your credit score. Usually these fees are higher if your credit is not good. The annual fee is another way that the company makes money from your use of their card. In some cases you can ask for this fee to be waived and many companies will waive it.

Types of Rewards and Incentives

The rewards and incentives are created so that people will spend more money on their credit cards. Some will give you a percentage of cash back for the money you spend which is usually about one to one and a half percent. You can earn bonus points from some companies towards the purchase of other items or when you buy from their networks.

Each card company offers rewards for different reasons but they all are geared to get you to spend more so they can earn more interest. Before you choose your card make sure that you check your spending habits to see whether the card incentives will be worth it.