Credit cards are definitely a necessity of modern day life. Unfortunately choosing the right credit card can be a task. However, the more you know about credit cards and how they work, the better your chances of finding a card that is most accommodating for your spending habits. Annual Fee This fee is a yearly charge for the privilege of doing business with the financing company. The amounts can vary from card to card. Your credit plays a major role in the interest rate and fee’s that you will be charged.

Late Fees Late fees represent a major source of income for credit card companies. According to recent reports late fee’s have skyrocketed from 1.3 billion in 1996 to 7.3 billion in 2001. Most people who are late with their payments end up paying more, with late fee’s averaging around $15 for balances up to $100. These late payments are also tremendously affecting your credit. You may interpret the word “late” a little differently than the credit card companies. Unfortunately they make the rules. This means that if your understanding of that word collide, they have the upper hand. In the fine print of your credit card contract may be the specific time of day by which your monthly payment must be received in order not to be hit with late fee’s. The Fair Credit Billing Act requires credit card companies to credit your account on the day that the payment is received. The fine print, this time according to law, permit’s the individual credit card company to make it’s own specific guidelines. If those guidelines are not met, the processing of your payment can be delayed by as much as five days, which turns your payment into a late one. Many people find that the greatest number of their bills, such as credit cards and mortgage, are due a the first of the month. This may place a burden on your ability to pay on time, just ask your credit card issuer to change the due date for your monthly payment. Transferring Balances When you give in to never-ending temptation to transfer your balances on one card to another with a lower interest rate, you may not pay attention that the terms of your agreement often provide for as much as 3 percent of the amount of the debt you transfer. Fair Issac suggest that people only recently establishing credit should be aware of the fact that opening a large number of new accounts in a short period of time will lower the average age of your accounts, which will lower your score. Secured Cards Usually those who have poor credit and are not able to qualify for a standard credit card may find that they are eligible for a secured card. These card require that the credit card holder have a bank deposit with the credit card -issuing bank. This deposit is to guarantee or secure the payment of the credit card bill. The line of credit is usually strongly related to that bank account, which can only be accessed by the bank if the credit card holder fails to pay their bill. This card is best for re-building credit, if the card holder pays their bill on time and establishes a flawless payment history, in the future they will be able to apply for a un-secured card. Picking a Card Please consider these factors when choosing a card that best suites you. •  If you are paying your entire balance every month, the interest rate is irrelevant. If you will not be paying the balance off every month, the interest rate is the most important factor in choosing a card. •   Is the interest rate fixed or variable? •   If considering a teaser rate, are you well educated with the conditions that can cause you to lose that rate and what will the new interest rate be when it goes up? •   Besides the annual fee, what other fee’s will be associated with the card’s use •  If transferring balances from one credit card to another find out the fees and conditions for doing so.