The features and benefits of credits cards have changed over the last few years, and they’re things you need to know about. Interest rates have soared, late fees are higher than ever, and attractive incentive programs are ones you don’t want to miss.
Whether you’re just starting out in the world of credit or you’re a seasoned cardholder, you should educate yourself on what to look for in a credit card so that you don’t make a mistake that ends up hurting your credit score. Check out these key factors to consider the next time you decide to go for plastic.
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Most credit cards now come with cash-back and rewards programs to incentivize cardholders to use the cards to make purchases. Many cards even offer $100 cash back when you spend $500 within the first 90 days of opening the card. You can earn points for using the card to make purchases on certain items, such as gas, groceries and utility purchases. Are you a big traveler? Many cards offer travel rewards that can save you a lot of money on airline, hotel, cruise and car rental purchases. Do you research to determine which rewards program makes the most sense for you.
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Look for a card with few fees or none at all, especially if you’re someone who isn’t the best at remembering to check your monthly statement. The first fee to consider is the annual fee, which is a yearly fee that ranges from $0 to $300, depending on the card. Fortunately, there is a wide range of cards that come with no annual fee at all. Also, be mindful of late fees, which have climbed to around $39 per late payment, based on the credit card you choose. Try to pay your credit card bill on time to avoid late fees completely.
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If you’re not planning to pay the bill in full each month, then a card’s APR (or annual percentage rate of interest) should matter to you. When you’re searching for your new card, find out what it is and if it changes. Most cards market an introductory rate, which can change over time based on your credit. For example, many cards may say they offer a 0 percent introductory APR, but after a certain period of time, the rate will increase based on your creditworthiness. If you can, pay off your credit card balance in full each month to avoid the issue of interest rates completely. But if that’s not possible, find a card with a 0 percent introductory APR and be sure to read the fine print on how it will change.
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