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5 Things to Look for When Choosing a Credit Card

Credit cards can be a useful tool in life. There are many options available from a variety of financial institution. Don’t just pick the first card you are offered. Do your homework.

5 Things to Look for when Choosing a Credit CardCredit cards can be a useful tool in life. There are many options available from a variety of financial institution. Don’t just pick the first card you are offered. Do your homework. Here are five important things to look for when you’re trying to decide which card is right for you.

1.  Interest Rate. The Annual Percentage Rate (APR) is the amount of interest you'll incur if you don't pay off the balance each month. Make sure you can afford the minimum monthly payment if you don’t plan on or are unable to pay off the card balance each month.
2.  Fees. Credit cards can come with a lot of different fees. Fees can include:

  • Annual fee: can be charged once a year or monthly.
  • Late fee: when you don’t pay your bill by the due date;
  • Over the limit fee: when you charge more than the maximum allowed;
  • Returned check fee: when the form of payment you use does not have sufficient funds;
  • Balance transfer fee: if you transfer a balance from another card;
  • Cash advance fee: charged if you take cash from your credit card; and
  • Expedited payment fee: some cards may charge extra if you want your payment applied to your credit card faster (ie. trying to avoid a late fee).
3.  Rewards: Some cards may offer cash back, loyalty points, or rewards. Depending on the card, you can earn rewards on all purchases and others you only earn rewards on certain items or at certain stores.
4.  Introductory Rates: You may be offered a low-interest rate for a specific period of time. Be aware that once this period is over, the APR will increase.
5.  Where Can You Use It: Where do you plan on using your new credit card? A store card, for example, can only be used at that particular store. If you need to use a credit card at multiple locations than this option would not be right for you.
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