Shopping for Credit

Applying for a credit card
You probably receive credit card offers in the mail quite frequently. Before applying, remember to look at all of the terms. There may be hidden costs or limitations that are not immediately obvious. Often, a low introductory APR will be quite high after a certain period of time or after you have an outstanding balance. There may also be costs associated with transferring a balance from one card to another.

In addition to offers you receive in the mail, you can also apply for credit cards offered at many department and clothing stores. These cards can be quickly approved and usually have lower credit limits and higher interest rates than bank cards. Banks also offer credit cards. You can find offers at your local bank, in the newspaper and on the internet. Banks and other financial institutions offer both secured and unsecured credit cards. Before applying for a credit card, consider what the card will be used for. Remember that it is not free money. It is a loan that you must repay and may have costly interest payments.

Shopping for credit
When looking for a new credit card, it is important to shop around. Different cards will have terms that vary widely and offer different benefits and advantages. When considering a card, keep the following items in mind:

• In addition to the APR and interest rate, discussed above, check what annual fees, late fees or over the limit fees you will have to pay. If you have good credit history, most issuers will waive the annual fee.
• The grace period is the number of days you have to pay your balance before a creditor starts charging interest.
• The balance computation method will determine how your interest is calculated. Though there are a variety of methods, the most common is average daily balance.
• Beware of introductory rates. You might start out with a low rate or no annual fee in the first year but expensive conditions apply thereafter.
• Beware of credit card issuers who charge application fees. Most credit cards don't charge fees to open accounts.
• Start small. Don't charge too much until you've had a chance to get comfortable with your monthly bill.