Credit Card Savvy

Credit cards can be convenient at times, but mismanagement can cause financial heartache. The best way to become a savvy credit card user is through understanding:

Your Interest Rate

Interest rates can vary dramatically between credit cards. The lower the interest rate is the better, but many are surprised by the savings difference in percent rates.

• A balance of $6,000 at 18% APR would cost $1,080 per year in interest charges
• By transferring this balance to a 5.1% APR card the annual interest charges would be $306

That is a savings of more than $750 per year. Do your homework and find the lowest interest rate credit card available.

Your Introductory Rate

Introductory rates can tend to come with some amount of fine print. These offers can be quite tempting, but be cautious before making a commitment. Here are a few things to be aware of:

• The introductory rate usually last for 2-3 months, but several may offer up to a 6 month introductory rate period.
• After the introductory rate expires the ongoing interest could be greatly higher.
• There could be a separate and higher interest rate along with additional fees on transferred balances.
• A penalty fee that increases the interest rate to above 20% on top of late fees could be applied to the balance on the credit card if you are late on making payments.

Your Grace Period

Your grace period is the time from when you made a purchase before interest charges begin. Keep in mind that the longer the grace period the better. Usually the grace period only applies if you pay your balances in full each month.

These are a few things to be aware of when looking at taking on the financial burden of a credit card. Remember to always read the fine print.