Choose a Credit Card Based on Its Terms and Conditions

People select their credit cards based on any number of different criteria. Some people want to work specifically with the bank that they are used to borrowing from and so will only consider cards that are from that lender. Other people select their cards based on much more impulsive or superficial reasons – they go with whatever company sends them an offer in the mail or they select a card based on its advertised design. Although there are many different things to consider when choosing a credit card, it’s important to think through the selection carefully. The final decision should be based on the terms and conditions of the card, not on any of the other factors that might influence a lender one way or another.

The following terms and conditions should always be looked at closely when selecting credit cards:

• Interest rate. This is the number one credit card term to consider when choosing a card. The interest rate should be low or you’re going to end up paying a fortune on balances. The low interest rate should last for as long as possible. If it’s an introductory rate, you should also look at the rate that will be put in place after the introductory period is over. Additionally, you should look for card that calculates the interest using an Average Daily Balance system not a Previous Month Balance system.

• Fees. All cards have different fees associated with them. As a borrower, you should always know what those fees are. You should choose cards with low fees. But you should also choose cards that have fees which aren’t going to affect your. For example, a card may have a high fee for late payments but if you never miss your payments, this doesn’t matter much when choosing the card. Fees to look for when choosing cards include an annual fee, a late payment fee, a cash advance fee, a balance transfer fee, and fees for going over your credit line.

• Payment options. Some cards have very strict payment options with penalties imposed for not sticking to them. Other cards can be very flexible in payments. For example, many credit cards let their users select the due date of their payments in order to be able to time them appropriately with the way that paychecks come in to the household. You’ll want to choose a card that has payment options that work for you.

In addition to reviewing the terms of the credit cards, a consumer should always review the benefits that are offered by the credit card. For example, cards may offer cash back or “rewards” points that make spending money give them something in return. Alternatively, they may offer the opportunity to donate to specific charities each time the card is used. The benefits should be weighed against the terms and conditions to select the card that makes the most sense for the borrower.