Finding the Best Credit Card Offer

Credit card debt is at an all-time high, and more people than ever are burdened with more debt than they can possibly repay in a reasonable amount of time. While part of this is due to simple overspending, part of it is due to the fact that credit card debt carries some of the highest interest rates of all types of debt. Making the credit card company’s minimum payment every month more often than not simply keeps you in debt for decades, and does little towards paying back the principal amount you borrowed.

Despite the presence of teaser rates and other come-ons, credit cards remain expensive. Besides high interest (often increased substantially after the initial “come-on” rate has expired), there are also very often significant fees attached to your card as well.

Getting that “low introductory rate” isn’t always a good deal, so do the math. Often, the introductory rate is good only for any amount you transfer from other cards. A higher rate is charged for new purchases. Also, those attractive introductory rates can become voided if you make a single late payment. Besides determining both the introductory rate and the standard rate, determine how the card issuer calculates interest. Ideally, any new purchase does not start to accrue interest until after the payment date. More commonly though, a card will calculate an average daily balance, and add any purchases made during the month–meaning that you begin paying interest immediately on new purchases.

Another thing to realize is that when a credit card issuer offers you a “fixed rate,” there’s very little that is actually “fixed” about it. The rates can (and often do) change if the issuer gives you 15 days notice. Issuers will also charge varying late fees and annual fees. Those annual fees can be substantial, and are often hidden in the fine print–and can easily wipe out any savings you get from a lower interest rate. Issuers can also add on a wide range of other fees, including fees for taking cash advances or using ATMs, and even an enrollment fee just for signing up.

In addition to all of these considerations, watch out for special premium offerings and “rebates.” Spending rebates in reality very seldom amount to anything worthwhile, and the tiny bonus you may receive can quickly be outweighed by fees and higher interest. Also be aware that the rate you are offered may vary from the rate advertised, depending on your credit rating.

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