What to Look For When Choosing a Credit Card

When looking for a credit card many people simply choose the card with the highest credit limit.  Although credit limit is a factor to consider when choosing a card there are many other important factors to consider when applying for a credit card:

1.) Monthly Periodic Rate or Interest Rate: All Credit cards charge interest daily on an account's unpaid balance.  Interest rates vary from card to card and unless you plan on paying off your credit card in full each month then the interest rate of the card you choose is very important.

2.) Annual Percentage Rate or (APR): This is the monthly periodic rate expressed as a yearly rate of interest.  The annual percentage rate or APR is the amount of interest that you will pay on your credit cards balance over the course of a year.  To convert from APR to Monthly Periodic Rate simply Divide the APR by 12.  So if the APR is 18% then 18% ÷ 12 = 1.5% which is the monthly periodic rate.

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3.) Grace Period.  The grace period is the amount of time that you have to pay your balance in full each month before interest and finance charges are added to your balance.  Once again if you do not plan on paying off your credit card in full each month then you should choose the card with the longest grace period.

4.) Fees:  Some cards have fees such as annual fees, late fees, fees for exceeding your credit limit and so on.  The card you choose may have fees but look for a card with no annual fees and low fees other items.

5.) Credit Limit: This is the maximum amount that you can charge on your credit card at any one time.  You should look for a card that is sufficient for your needs however; be careful if you get a card with an extremely high limit because you do not want to get into excessive credit debt.

In addition to the five points, keep in mind how widely the card is accepted by businesses that you patronize as well as how widely the card is accepted in areas that you travel to.