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Choosing a Credit Card

There are several factors to weigh when considering a credit card offer. Issues such as interest rate, annual fee and grace periods are important factors, and each should be considered based on how you plan to use the card.

Interest rate—If you plan to keep a high balance, shop for the card with the lowest rate. As a tradeoff you may have to pay a higher annual fee. Keep in mind that credit card issuers may change their interest rate at any time. They only must notify you in writing of their intentions to do so.

Always check if a low rate is part of an introductory offer. If so, issuers may raise the rates considerably after the introductory period.

Some cards use a variable rate system. With these cards your interest rate can change from month to month with no notice.

Annual fee—If you pay your balance every month, look for a plan with a low or no annual fee. In this case, the interest rate is not a factor because your account won’t accrue interest.

Grace period—While many credit cards give you 25 days to pay any new balance without incurring interest, some do not. This means you will be charged interest from the moment of purchase.

There are many other factors involved in choosing a credit card. Some cards offer annual cash back programs, free insurance on rental vehicles, or some other incentive for you to use their card. Examine the offer carefully and choose the program tailored most to your needs.