Maybe you're looking to get your first credit card or shopping around for a new one. Before you lock yourself into a particular credit card make sure you get the answers to these questions first!
1. What is the interest rate?
Make sure you find out what the interest rate will be for the credit card you're considering. The lower your interest rate the better it is for you if there is a balance on your credit card. So find out this information up front. If the interest rate quoted is higher, keep looking for a credit card company that will give you a good rate. Of course, the key to getting a lower interest rate is your overall credit.
By the way, beware of teaser low introductory rates that a prospective creditor may offer you to sign up for their credit card. Make sure to ask them if you will continue to get this low rate for a long period of time and not for just a month or two. You will find that if you get reeled into getting a credit card with a low introductory rate, your interest rate may increase significantly later!
2. How will my credit card balance be calculated?
Most creditors use an average daily balance to arrive at the balance for your credit card. This would include any new purchases charged to the credit card less payments and credits applied.
3. If I pay late on my credit card is there a charge and if so how much?
It is important to find out if your credit card company will charge you a late fee and if so how much? You could pay up to $20 or more in late fees if they are applied to your credit card balance. Some credit card companies may charge you a late fee even if your payment arrives the day the payment is due but the wrong time of the day when payments are posted. Your interest rate could also be increased if your payment is received late. This interest rate increase could be substantial if you carry a balance on your credit card.
4. Could you give me a better interest rate?
Find out if the credit card company will give you a better interest rate than the initial rate quoted. Let them know you've been shopping around and will consider going with the company that provides you with the lowest interest rate.
5. Will I be charged more interest if I don't use my credit card?
If you only want to use your credit card for emergencies or certain types of purchases and don't intend on using your card often, you'll need the answer to this question. Some credit card companies may increase your interest rate, charge you a fee or cancel your credit card if you don't use their card very often or at all! If this is the case, you don't need this credit card.
Do your research before you apply for that credit card and make sure that this card is beneficial to you! If it isn't, then you don't need to apply for that particular credit card. Remember there's lots of competition from prospective credit card companies for your business, make them earn it!
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