There are many types of credit cards with various features,
but there is no one best credit card. It is important to shop around and choose
the right credit card to suit your needs
How do you intend to use the credit card?
The first question to be answered is how you intend to use
the card. You need to sit down and think about what is important and how you
will be using the card.
are going to pay the bill in full every month, then the interest rate does not
really matter to you. Look for a card with no annual fee and longer grace
periods so you do not get hit with finance charges.
are going to carry a balance, you want the lowest possible interest rate and a
low introductory rate.
intention is to use the card for most of what you buy, look for a card with a
generous credit limit and a solid rewards program.
If it is
only going to be used for emergencies, go for a no-frills card with a low
interest rate and low fees.
Credit card terms
When you apply for a card, consider the following
information which is required to be disclosed on credit applications by the The
Fair Credit and Charge Card Disclosure Act.
percentage rate (APR)
It can either be a fixed rate or a variable rate that is
tied to another financial indicator (most commonly the prime rate). A fixed
rate will be the same from month-to-month; a variable rate can fluctuate.
However, even a card with a fixed interest rate can change
based on certain triggers – paying your card late or going over the limit. The
credit card issuer can also decide to change it; they just have to notify you.
This is the interest rate used to determine the finance
charge on your balance each billing period.
While some cards have no annual fee, others expect you to
pay an amount each year for being a cardholder.
Many card issuers offer reward programs to entice their
customers to use the card. Look for a program that offers flexibility, such as
cash or travel, and rewards that you will actually use. Be sure the card issuer
does not charge extra for the rewards program. Be mindful of the restrictions
that may come with the program. Take note of when rewards expire and if there
are limits regarding how many points you can use.
This is the number of days you have to pay your bill before
finance charges start. Without this period, you may have to pay interest from
the date you use your card or when the purchase is posted to your account.
Most lenders calculate finance charges using an average
daily account balance, which is the average of what you owed each day in the
billing cycle. Look for offers that use an adjusted balance, which subtracts
your monthly payment for your beginning balance. This method usually has the
lowest finance charges. Stay away from offers that use the previous balance in
calculating what you owe; this method has the highest finance charge. Also do
not forget to check if there is a minimum finance charge.
Some credit card companies may allow individual retailers to
set and charge a fee when you swipe your card.
fees and penalties
Common charges include fees for transactions, such as
balance transfers or cash advances, requesting an increase in your credit limit
or making a payment by phone. Look for cards with reasonable fees if you intend
to use these services. Do not pay extra for rewards programs. There are plenty
of cards who do not charge extra for them.
Be careful: sometimes companies may also try to upsell by
offering other services such as credit protection, insurance or debt coverage.
Bankrate.com provides free credit card tips and information.
Card Hub allows you to search for and compare many types of
credit, prepaid, and gift cards and provides interactive tools and educational
Card Web lists credit cards and offers e-mail newsletters,
frequently asked questions and online credit card calculators.
Card Ratings lists and reviews credit cards, and offers tips
and credit card calculators.
NerdWallet allows you to research the credit the best suits
your needs, based on your spending habits, whether or not you carry a balance
each month, and preferences for reward programs.
This is the amount of money the credit card issuer is
willing to let you borrow. Depending on your credit history, it could be
anywhere from a few hundred dollars to thousands of dollars. You do not want to
end up in a situation where you are close to maxing out your credit limit. It
can hurt your credit score.
Pay by the due date
It is important to pay your bill on time. If you do not,
count on paying late fees and additional finance charges.
When you make a payment, your card issuer generally must
credit your account the day they receive it, but there are exceptions.
The issuer can specify reasonable requirements for payment.
For example, your issuer can set a reasonable cut-off hour for your payment to
be received for crediting on that day, but generally, it cannot be before 5
p.m. on the due date at the location the issuer specifies.
The issuer can require that you include an account number or
payment stub with your payment.
The issuer does not have to credit your account the day your
payment is received if a delay will not result in a charge to you.
To help avoid additional charges, follow your issuer’s
payment instructions. Sending your payment to the wrong address – even if the
payment is received and accepted at some other office of the issuer – could delay
crediting your account for up to five days. If you pay by mail and misplace
your payment envelope, look for the payment address on your billing statement
or call the issuer for the correct address for payments.
If you pay your bill online, set up a reminder a week or so
before the bill is due to be sure you pay on time. Set up a return electronic
notice showing the company received your online payment. No matter what method
you use, check your billing statement to be sure you have the right due date and
location for each account.
Automatic debiting to your bank account can be a convenient
way to pay bills, but there are factors to consider. For example, the amount
due each month could vary, and you would need sufficient funds in your bank
account to pay it. Otherwise, you could overdraw your account, be charged for
insufficient funds, and damage your credit rating. Under federal law, you
cannot be required to use automatic debits from your bank account to repay an
extension of credit.
If you decide to set up automatic debits, the creditor must:
disclose the terms of the transfers;
written or electronic authorization; and
a copy of the authorization disclosing the terms.
If you have a credit balance on your account, you can keep
it or write your issuer for a refund if the amount is more than one dollar.
Your card issuer must send you a refund within seven business days of getting
your request. If you do not ask for a refund and you do not make any other
purchases for more than six months, the issuer must make a good faith effort to
send you a refund.
Card issuers must follow rules for correcting billing errors
promptly. They must send you a statement outlining these rules when you open an
account and then at least once a year while your account is open. In fact, many
creditors routinely include a summary of your rights with your billing
It is important to check your account activity regularly and
carefully review each billing statement.
If you find a mistake on your bill, you can dispute the
charge and withhold payment of that amount while the charge is being
investigated. The error might be a charge for the wrong amount or for an item
that was not delivered as agreed. You still have to pay any part of the bill
that is not in dispute, including finance and other charges not related to the
To dispute a charge:
Write to the issuer at the address indicated on your
statement for “billing inquiries.” Include your name, address, account number,
and a description of the error.
Send your letter as soon as possible. It must reach the
issuer within 60 days after the issuer mailed you the first bill with the
The issuer must acknowledge your complaint in writing within
30 days of getting it, unless they have resolved the problem. The issuer must
resolve your dispute within two billing cycles or 90 days, whichever is later.
If your credit card is lost, stolen, or used without your
permission, you can be responsible for up to $50 if reported within 60 days
from when the transaction took place. If you report the loss before the card is
used, you are not responsible for any unauthorized charges.
To minimize your liability, report a loss as soon as
possible. Some issuers have 24-hour toll-free telephone numbers to accept
emergency information. It is a good idea to follow-up with a letter: include
your account number, the date you noticed your card missing, and the date you
reported the loss. Keep a copy of the letter for your files.
give your account number to anyone on the phone unless you have made the call
to a company you know to be reputable. If you have never done business with
them before, do an online search first for reviews or complaints.
your cards separately from your wallet. It can minimize your losses if someone
steals your wallet or purse. And carry only the card you need for that outing.
transaction, keep your eye on your card. Make sure you get it back before you
walk away and make sure it is the correct card.
sign a blank receipt. Draw a line through any blank spaces above the total.
receipts to compare with your statement.
bills promptly – or check them online often – and reconcile them with the
purchases you have made.
your card issuer if your address changes or if you will be traveling.
write your account number on the outside of an envelope.
leave cards or card receipts (which may have important information such as the
card number or part of the card number on it) in cars.
keep cards out of sight
lend a card to a friend.
old cards. Shred the card or be sure to cut through the card number before
disposing of them.
record – in a safe place separate from your cards – of your account numbers,
expiration dates, and the telephone numbers of each card issuer so you can
report a loss quickly.
For help & information
Board of Governors of the Federal Reserve System
Regulates state-chartered banks that are members of the
Federal Reserve System, bank holding companies, and branches of foreign banks:
Federal Reserve Consumer Help
PO Box 1200
Minneapolis, MN 55480
Consumer Financial Protection Bureau
Regulates banks and credit card companies that have assets
over $10 Billion:
Consumer Protection Bureau
PO Box 4503
Iowa City, IA 52244
Federal Deposit Insurance Corporation
Regulates state-chartered banks that are not members of the
Federal Reserve System:
Division of Compliance and Consumer Affairs
550 17th Street, NW
Washington, DC 20429
(877) ASK-FDIC (275-3342)
National Credit Union Administration
Regulates federally chartered credit unions:
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428
Office of the Comptroller of the Currency
Regulates banks with "national" in the name or
"N.A." after the name, federal savings banks, and federal savings and
Office of the Ombudsman
Customer Assistance Group
1301 McKinney Street, Ste.3450
Houston, TX 77010
Federal Trade Commission
Regulates other credit card and debit card issuers:
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
(877) FTC-HELP (382-4357)
Wisconsin Department of Financial Institutions
Regulates state chartered financial institutions located in
Bureau of Consumer Affairs
201 W Washington Ave, Ste. 500
PO Box 8041
Madison, WI 53708-8041
(Information taken from the usa.gov fact sheet “Choosing a
Credit Card.” And the Federal Trade Commission fact sheets “Credit, Debit, and
Charge Cards,” “Using a Credit Card” and “Protecting Against Credit Card