Credit Cards- What To Look For

In the past, it seemed like the average US consumer received a dozen credit card offers a week. Now, with the credit crisis, the inundation of junk mail has slowed, but the offers are still there.

Even as we all try to cut back on our spending, or have sought the help of lovemoney, living without a credit card is incredibly difficult. Yes, you could force yourself to never go into credit card debt by only using a debit card. However, if you are this disciplined, then you are needlessly losing out on rewards points available with a credit card.

There are two types of credit cards you should consider. If you always pay your balance off each month and know you’ll continue to do this, then you should opt for a rewards credit card. The cash back ones are okay, but you’ll likely earn more goodies if you go for a hotel credit card or an airlines card. Just apply for a credit card with an airline or hotel brand that you use often; you will likely earn yourself more money in terms of free hotel nights or free airfares than you would have through a pure cash back card.

If you are the type that occasionally carries a balance, then don’t worry about the cash back or the rewards cards. Just focus on the APR.

There are two types of low APR cards- ones with a nice introductory rate (often 0% for up to a year) and others with a nice long-term rate. The better one for you depends on your financial situation. If you habitually and continually carry credit card debt, pay more attention to the long-term rate. Again, you should eventually learn to kick the habit of carrying much credit card debt, but for now, this will help slow down the bleeding.

If you anticipate doing some spending that you cannot pay back immediately but should be able to pay back within a year or so, go for the one with the low introductory rate. Just make sure you never miss a payment though or else they’ll zap you for the full APR amount, which can be as high as 20% or so.