All major credit card companies promote relentlessly their products while their sales are driven primarily by consumers’ thirst for additional credit. Currently, the average consumer has 9 credit cards with $19,000 in available credit. Not all credit cards are the same however and all credit card debt consumers can gain significantly by choosing the cards that match their specifications. This requires understanding the features of credit cards along with one’s own needs.
Credit card features, implied costs and fees, and offered perks vary significant. The majority of credit cards have variable interest rates (or APRs) that usually change without notice and are linked to the market prevailing interest rates. The cardholder’s personal credit score is highly correlated with the interest rate offered. Additionally, some credit cards also charge an annual fee, while others don’t while late payment penalties, cash advance fees and over limit charges can vary. So, in case monthly bills are paid in full the best choice may be a card with no annual fee. If balances are carried from month to month the best choice may be a card with a low interest rate and a longer grace period.
A single credit card may have several APRs as the majority of cards usually offer different APR for purchases, for cash advances, and for balance transfers. The APRs for cash advances and balance transfers are usually higher than the APR for purchases. Some credit cards feature tiered APRs meaning that different rates are applied to different levels of the outstanding balance while in case of late or missed payments some of them level a penalty interest rate. Also, it is very common for credit card companies to offer introductory APRs or no-interest charge period for a short period of time to allure consumers. Post the introductory period a higher APR will apply. Credit card applications and agreements carry, besides the card’s term and conditions, a wealth of information usually in the form of fine letters that all holders should be aware of.