How to Choose the Right Credit Card – Part 2

To Read Part 1 of this Series Click – Choose the Right Credit Card Part 1

Part 1 covers the many ways to use a credit card, how you will use yours, understanding all the different types of rates and finding a good interest rate for your needs.

Know the Credit Card Fees

There are many types of fees associated with different aspects of a credit card. Most people think that the only fee with a credit card is an annual fee. This is incorrect as there are many different fees. A fee is not the interest you pay on the credit card. Fees are extra costs, either to have the credit card or use certain features of the credit card.

  • Annual Fee – Some credit companies charge a yearly fee in order for you to use the credit card.  These fees are popular for points and mileage reward credit cards. The annual fee can often times be billed monthly.
  • Late Payment Fees – If you miss the due date of your payment you will be charged a late payment fee.
  • Overdraw Fee – If you borrow over your credit limit you may be charged an overdraw fee.
  • Balance Transfer Fee – Some credit companies will charge a fee to transfer your balance from one credit card to another credit card.
  • Cash Advance Fee – Charged when taking a cash advance.  This fee may be a percent of the cash advance or just a flat fee.
  • Credit Limit Increase – Some credit companies will charge a fee for increasing the amount of your credit limit.
  • Bounced Check Fee – If your check is returned with insufficient funds you will be charged a fee.
  • Credit Card Set Up – In order to set up a credit account some companies require a fee.
  • Payment Fees - Some types of payments can have fees attached to them.  For instance some companies charge a fee to make a payment by phone, or to make a same day payment if you are about to be late on that months payment.
  • Customer Service Fees - There are some fees that may be accrued for certain customer service actions.

Remember to always review your credit card statements at least once a month.  If you see any fee’s that do not seem right place a call to your credit company.  Many credit companies are willing to work with you, and often times you can get fees removed with just a phone call and asking them to be removed.

Credit Limits

Your credit limit will be set by the credit card company based on what you qualify for.  Your credit limit is the maximum that you can borrow against the credit card.  Adding all types of transactions including purchases, transfers, advances and any other usage of the credit card will cause your balance to get closer to your credit limit.

There may be a fee if you exceed your credit limit.

Your credit limit may increase or decrease depending on credit activity, payment history, credit scores and many other factors.  You can request that your credit limit be increased, but this may accrue a fee.  Be sure to check before making the request.

Grace Period

The grace period is the number of days you have to pay your credit card bill before accruing any interest charges.  If you make a purchase and want to pay it off before any interest accrues then you have to pay it off within the grace period.  Most of the time there is no grace period for transfers and cash advances.  Interest will accrue immediately on those forms of borrowing.

Some credit cards only extend a grace period if the bill is paid in full every month, within the grace period.  Once a balance is carried from one month to the next the grace period may be forfeited from that point on.  Be sure to read the grace period terms in your credit card contract.  If you are confused or need help be sure to ask the credit provider to explain in detail.

To Conitue this article… Click How to Choose the Right Credit Card – Part 3

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