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Thinking about how to use the credit card is the initial step in the choice of a credit card.

When full payment of monthly bill is expected and card features like flyers miles are not in the interest of the customer, a card with a waived annual fee and longer grace period is the best option.

When balance is carried over to the next month, a card with a lower interest rate may be more appealing.

When card will be used for cash advances, the preference can be a card with a lower APR and lower charges on cash advances. Higher APR for cash advances are charged by some cards for cash advances than purchases.

The grace period is the amount of days needed to settle the bill in full without incurring finance charges.

Only new purchases are given grace period. Cash advances as well as balance transfers do not have a grace period rather charged interest at the onset.

When balance is carried over from the previous month, a grace period will not be given for new purchases. Instead, interest will be charged immediately on the moment a purchase is made and on the previous unpaid balance. Information on computing balances for new purchases is included in the application form.

The finance charge is the payment amount for the credit used. It is dependent on the outstanding balance and the APR.

In calculating the outstanding balance, several methods are used by credit card companies. It makes a big difference on the finance charge to be paid by the customer.

A minimum finance charge is given by some credit cards. The minimum fee may still be charged even if there is a lesser finance charge. It is only applied when a finance charge is to be paid meaning there is a previous balance from the last billing cycle.

Several kinds of cards are offered by many credit card companies:

Secured cards entails deposit as security. The higher the deposit, the higher is the credit limit. It is usually offered to people who have previous credit problems or limited records.

Regular cards, do not entail security deposits and with minimal features. They have higher limits on credit compared to secured cards but lesser credit limits than premium cards.

Premium cards (gold, platinum, titanium), provide higher credit limits and additional features such as warranties on products, insurance on travel and emergency services.

You may freely reprint this article provided the following author’s biography (including the live URL link) remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

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Maybe you’re looking to get your first credit card or shopping around for a new one. Before you lock yourself into a particular credit card make sure you get the answers to these questions first!

1. What is the interest rate?

Make sure you find out what the interest rate will be for the credit card you’re considering. The lower your interest rate the better it is for you if there is a balance on your credit card. So find out this information up front. If the interest rate quoted is higher, keep looking for a credit card company that will give you a good rate. Of course, the key to getting a lower interest rate is your overall credit.

By the way, beware of teaser low introductory rates that a prospective creditor may offer you to sign up for their credit card. Make sure to ask them if you will continue to get this low rate for a long period of time and not for just a month or two. You will find that if you get reeled into getting a credit card with a low introductory rate, your interest rate may increase significantly later!

2. How will my credit card balance be calculated?

Most creditors use an average daily balance to arrive at the balance for your credit card. This would include any new purchases charged to the credit card less payments and credits applied.

3. If I pay late on my credit card is there a charge and if so how much?

It is important to find out if your credit card company will charge you a late fee and if so how much? You could pay up to $20 or more in late fees if they are applied to your credit card balance. Some credit card companies may charge you a late fee even if your payment arrives the day the payment is due but the wrong time of the day when payments are posted. Your interest rate could also be increased if your payment is received late. This interest rate increase could be substantial if you carry a balance on your credit card.

4. Could you give me a better interest rate?

Find out if the credit card company will give you a better interest rate than the initial rate quoted. Let them know you’ve been shopping around and will consider going with the company that provides you with the lowest interest rate.

5. Will I be charged more interest if I don’t use my credit card?

If you only want to use your credit card for emergencies or certain types of purchases and don’t intend on using your card often, you’ll need the answer to this question. Some credit card companies may increase your interest rate, charge you a fee or cancel your credit card if you don’t use their card very often or at all! If this is the case, you don’t need this credit card.

Do your research before you apply for that credit card and make sure that this card is beneficial to you! If it isn’t, then you don’t need to apply for that particular credit card. Remember there’s lots of competition from prospective credit card companies for your business, make them earn it!

Nocita Carter is a writer and web designer that creates websites providing informative tips on various subject matter including personal finance tips on your personal finances at http://www.personal-finance-tips-for-you.com ; dating tips at http://www.mydating-tips.com and your choice of ebooks at http://www.ebook-corner-for-you.com.

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Credit History - Before you apply for a card you should get a free credit report so you will know what types of cards you are eligible for. (By law you can can get a free credit report once annually). If you have a limited or damaged credit history you will have to limit your potential choices to cards that cater to your particular situation. For example, cards such as the Aspire Gold Visa, Orchard Bank Gold Mastercard and the Orchard Bank Platinum MasterCard (to name a few) are cards geared toward consumers wishing to establish or rebuild their credit. These cards usually have higher aprs and come with annual fees. So you will have to shop around checking different offers — maybe even make some phone calls in order to find the best credit card for your financial situation. By using one of these cards responsibly for a certain period of time, you will eventually be able to upgrade to a better card with better rates thus improving your credit rating.

Keep in mind that if you apply for a card that requires a better credit score than you currently have — you WILL be rejected. Consequently this rejection will be placed on your credit report and will adversely affect your chances for getting approved for other credit cards as well. So unless you are pre-approved make sure you know where you stand with your credit rating before
applying.

On the other end of the spectrum if you have good to excellent credit you will have a much wider array of choices with much
better rates, terms and conditions. Experienced credit cardholders usually base their decisions on the following criteria:

Introductory APR - This is usually the most alluring component of any credit card offer. Many credit card companies will offer 0% apr for certain periods of time. For instance these intro rates can last anywhere from 6 to 15 months. In these cases you should always check to see what the regular apr is once the intro period is over. Also be advised that if you are late with just one payment (default) all aprs associated with your card will automatically increase to an exorbitant rate — some are over 30.00%…pay your bills on time.

Annual Percentage Rate - Is the apr that represents (part) of the cost of credit on a yearly basis (after the intro period expires) and is usually applied to new purchases, balance transfers or both. You will need to check the cards terms and conditions for particulars — The lower the better.

Annual Fees - Many Credit Card companies will charge annual fees which can range anywhere from $25 to several hundred
dollars depending on the type of card. These fees are usually associated with rewards based credit cards. On the other hand
there are many card offers which have no annual fee - Shop around.

Transaction Fees - Unless otherwise stated, credit card companies usually charge a fee for exceeding your credit limit, making a late payment, getting a cash advance and on balance transfers. Make sure you know these fees before applying.

Grace Period - Accept for a limited or poor credit history, most credit cards offer some sort of grace period which can be 15 to 25 days. This is a free period in which you will not have to pay finance charges if you pay your balance in full by the due date. This doesn’t mean you have 15 to 25 days after the due date to make the minimum payment.

When trying to decide on a credit card the bottom line is to understand what you want from the card, your spending habits, your credit score, what the card has to offer, the terms, conditions (fine print) and all the expenses the card has associated with it so you can make a more informed decision and avoid any unexpected expenses or marks against your credit score.

Randy Savage is the webmaster of http://www.the-best-of-credit-cards.com/index.html where consumers can compare and apply securely for the credit card of their choice. For added convenience there is also a list of additional credit card resources at http://www.the-best-of-credit-cards.com/resources.html and http://www.the-best-of-credit-cards.com/credit-card-resources.html

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