When you are choosing a credit card, you need to know the percentage rate you will pay on purchases, the grace period, the amount of your credit line, and if there is a yearly service fee on the account.
Read the small print on any contract they send you.
Is it a variable rate or a set rate? I have personally never accepted any rate that wasn't set (that holds true for mortgage rates as well).
I would rather know the rate than be surprised by a higher rate at a future time.
And note that you will pay a higher percentage on cash borrowed than you will on purchases.
A good rule of thumb is to never write a check off of a credit card for cash.
Be certain that a grace period is written into your contract.
It is usually for twenty-five days or more, and refers to purchases made after the billing period closes.
If you pay your bill in its entirety every month, you will not pay any interest on purchases made after the billing date.
But if you are carrying a balance, and paying interest on the account, every single purchase you make will accrue interest from the date of purchase.
Your credit line may be increased if your credit is good, you are making payments on time, or if you call and ask for an increase due to unusual expenditures coming up.
They will also offer expanded credit to you if you are keeping the charges close to the limit every month, to allow you to increase your debt, and their profits, even more.
Yearly service fees usually come with cards that offer other benefits, such as travel miles or cash back.
They also charge you if you have had previous bad credit and are a risk.
But many companies try to get them from unsuspecting new customers.
My rule is to simply refuse to pay them.
I tell them up front that I do not want to pay a service fee.
If they refuse, I refuse the card.
If they agree, and then bill me for it the following year, I call them and refuse to pay it.
If they take it off the bill I give them one more year.
If they bill me again, I cancel the card.
I have five credit cards, all having a different purpose.
None of them have a yearly service charge.
You don't have to have one either.
Read the small print on any contract they send you.
Is it a variable rate or a set rate? I have personally never accepted any rate that wasn't set (that holds true for mortgage rates as well).
I would rather know the rate than be surprised by a higher rate at a future time.
And note that you will pay a higher percentage on cash borrowed than you will on purchases.
A good rule of thumb is to never write a check off of a credit card for cash.
Be certain that a grace period is written into your contract.
It is usually for twenty-five days or more, and refers to purchases made after the billing period closes.
If you pay your bill in its entirety every month, you will not pay any interest on purchases made after the billing date.
But if you are carrying a balance, and paying interest on the account, every single purchase you make will accrue interest from the date of purchase.
Your credit line may be increased if your credit is good, you are making payments on time, or if you call and ask for an increase due to unusual expenditures coming up.
They will also offer expanded credit to you if you are keeping the charges close to the limit every month, to allow you to increase your debt, and their profits, even more.
Yearly service fees usually come with cards that offer other benefits, such as travel miles or cash back.
They also charge you if you have had previous bad credit and are a risk.
But many companies try to get them from unsuspecting new customers.
My rule is to simply refuse to pay them.
I tell them up front that I do not want to pay a service fee.
If they refuse, I refuse the card.
If they agree, and then bill me for it the following year, I call them and refuse to pay it.
If they take it off the bill I give them one more year.
If they bill me again, I cancel the card.
I have five credit cards, all having a different purpose.
None of them have a yearly service charge.
You don't have to have one either.
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