Understanding Credit Cards

Before choosing a credit card, start with your own credit union or bank and ask for the cards they offer. Be sure to compare at least three cards by reading the fine print. Be aware of each card's Annual Percentage Rate, annual fees, and any benefits that you may earn through spending (cash back, airline points, etc.)

• Only use your credit card for items already in your budget or emergencies. Before you use your credit card, make sure that you are able to pay off the balance on the items you are purchasing.
  
• Before getting a credit card, make sure you fully understand the fees and penalties associated with the card. The national average for a late payment fee is $29. If you exceed your credit limit even by one cent, you’ll be hit with over limit fees of up to $39.
• Be aware of "bait and switch" credit card offers that you may receive. Generally, companies advertise one credit card at a low-interest rate. Meanwhile, the fine print says the company can issue a different, more costly card with higher rates, if you do not qualify for the other.
• Be aware of balance transfer fees. It’s the big tease. A rock-bottom introductory rate to transfer your balance, but that tantalizing low rate may come with a steep transaction fee, 3% to 5% for transferring your balance to their card. That means transferring a balance of $1,000 at 4% will cost you $40.