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Decide how will you use a new credit card.
First you have to make a decision how you will use your credit
card:
If you are always going to pay your monthly bill in full, and
other features don’t interest you, the best choice may be
a card with no annual fee and and a long grace period.
On the other hand, If from time to time you will carry a balance
for a few months, the better choice would be a credit card with
lower interest rate. If you think that you are going to use the
card for cash advances, you need a card that offers lower annual
percentage rate(APR) and has low fees on cash advances.
Almost all credit cards charge much higher rates for cash
advances than for regular purchases.
Annual Percentage Rate - one card, different APR's.
- APR for purchases
- APP for cash advances
- APR for balance transfers
- Tiered APRs are different interest rates applied to the card's
balance - the higher the balance the higher rate.
- Penalty APR is a special higher rate triggered by a late payment
or other event, which in view of the credit card company, makes
you a higher risk.
- Introductory APR
and delayed APR are unusually low annual
percentage rates for a specified period of time.
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The grace period is the number of days until a finance charge
is being added. The most common grace period is 25 days, but some
cards offer longer(or shorter, even none) grace periods. If the
balance is paid in full within the grace period, no finance charge
is added.
Many credit cards do not give you any grace period if you carry
a balances, and there is usually no grace period for balance transfers
and cash advances.
Most credit card companies offer three different types of credit
cards:
- Secured cards, which require a security deposit equal to the
credit limit. Secured cards are usually offered to people who
have bad credit or no credit at all.
- Regular cards for people with fair or "almost"
good credit score.
- Premium cards like platinum, titanium, etc. offer high credit
limits and have special features: warranties, travel and car
rental insurance, cash back bonuses, frequent flyer miles, emergency
services.
Credit card liability limits.
It is important to note that all credit card holders are protected
by the federal law(Truth in Lending Act) In case the credit card
is stolen, lost or used without your permission you are
only liable for the first $50.
Related topics: prepaid credit card, credit
card fees, secure
cards.
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