Applying for credit cards can be tempting for many of us, especially when some stores and companies offer incentives to lure us in. Don’t get us wrong – credit cards are a great convenience, but they are also borrowing money that must be repaid. Here are 5 factors to keep in mind as you get your credit card and use it.
Five Things to Consider
- Annual Fees — Annual fees can vary from zero to $75 per year. Typically, the more you pay in annual fees, the more perks you receive as a cardholder. Try to choose a card with the lowest fee available, while offering you the benefits that best meet your needs.
- Penalties — The penalties for violations such as late payments and going over the limit vary from card to card. In addition to these penalty fees, some cards may also subject you to a penalty interest rate – the high default interest rate. Be sure to check the terms of the credit card agreement, especially if you are occasionally late with a monthly payment.
- Interest Rates — Be mindful when you see low "teaser" rates, for new cards or for balance transfers. A card company is only required to offer introductory rates for the first six months. Some may extend it for more than six months, but be sure to know what interest rate you will be paying after the introductory period ends.
- Rewards Programs — Some credit cards offer cash back, airline mileage, discounts on travel, electronic gifts, discounts on cars and other benefits. A rule of thumb is that the benefits are usually worth about 1% of the charges. If a card with these types of benefits is important, make sure the benefits are those you will use and that the other aspects of the card do not offset the benefits.
- Chip Technology — Banks and card companies in the U.S. are now converting more and more of their cards to include chip technology to offer their customers a higher level of security and a smoother experience when using credit cards overseas. If you’re in the market for a new credit card and you frequently travel abroad, consider looking for one with an embedded microchip.
One of the exclusive benefits of BFSFCU® membership is our line of Visa Platinum Credit Cards. In terms of savings, our credit cards offer competitive rates and low (or no) annual fees. We also offer the options of Member Rewards or Cash Rewards so that you can earn points or money back, just for using the card.