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Getting a Credit Card
Getting a credit card can be a good first step towards building a credit
history. Once you understand how credit cards work and how to use them
wisely, you may decide to get one. If you have never borrowed
money or had credit in the United States, there are still ways to get a
credit card. You can:
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Apply for a secured card. Many banks and credit card companies
offer secured cards.
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Apply for a department store card. Stores like Macy's and Old Navy
offer cards that you can use to buy things in their stores.
Choosing a credit card
There are several things to consider when shopping for
a credit card. All of these things together are called the terms of
the credit agreement. Important credit card terms to think about before
choosing a card include:
1.
APR
- Annual Percentage Rate or Interest Rate
is how much the bank charges to borrow. Usually between 8% and 23% for
credit cards. A lower APR is better.
2.
Fixed or Variable APR- A fixed APR stays the same. The bank
can change a variable APR anytime.
3.
Grace Period-The time the bank gives you to pay your bill before
charging interest-Usually 25-30 days.
4. Annual Fee-Many
banks charge a fee, usually between $40 and $100 just to use their credit
card.
5. Other- Some credit cards offer rewards for using the card
and sometimes they have high fees for late payments or if you charge more
than your credit limit.
All of these together add up to the
real cost of credit. When
you decide to buy something with a credit card you must remember that the
real cost is the price of the item plus the interest and other
fees you must pay as part of a credit agreement. |