Deciphering Credit Card Offers - What's Right For You?

A full third of all credit issuers' revenue now comes from fees

. The bigger the balance you carry, the more you pay in fees. Over-limit and late fees have become a huge profit center for these companies. The key to finding the right offer for your situation requires sorting through the fine print and understanding your credit needs.

If You Carry a Balance

If this describes you, then always seek to find the card with the lowest, fixed interest rate. Cards with low introductory teaser rates can quickly become a noose around your neck if you cannot pay off your balance before the rate goes up, often dramatically. You can't count on being able to simply transfer the balance to another card as lenders are increasingly watching out for that.

Grab the Best Rate

If you are one of those lucky individuals with good credit - a FICO of at least 720 - you should have no trouble finding a rate in the 10% or lower range. If your score is only mediocre - in the range of 650 or so - you likely will not find a rate less than the mid teens, unless it's an introductory offer for a limited duration.

Dig Into the Details

If you opt for a card with a low introductory rate, check to see how long the rate lasts and mark it on your calendar right away so you know when the rate goes up. Categorically stay away from offers that only give you the intro rate for a few short months, or worse, sent you a higher rate card because you didn't quality for the "lowest rate" or "pre-approved" offer.

If the card charges a fee to transfer balances, make sure you save enough during the low-rate period to make it worth your while. With fees in the 3-5% range to transfer balances, it's sometimes not worth the hassle.

Have a Backup Plan

Even if the card offers low rates on both purchases and balance transfers, when the intro rate expires all remaining balances start accruing interest at the higher rate. When that happens, you'll want to have another card to use for new purchases that you pay in full each month

A Final Word

Once you get your balances paid off, you can breathe a sigh of relief knowing that you're no longer hostage to the credit card companies rate games. This where many consumers get tripped up however. Whatever you do, don't ask to close your account or lower your credit limit. Unless you absolutely have no discipline when it comes to spending, leave your account open and use it occasionally to build credit. Closing accounts or lowering credit limits will hurt your credit score.

Deciphering Credit Card Offers - What's Right For You?

By: Mark Andrade

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