subject: What's The Best Credit Card Offer For You? [print this page] Before you select a new credit card, you need to understand your own credit needs and sort through all the fine print. The task is challenging at best, but a mistake can end up costing you a lot. Credit card companies get at least a third of their income from additional fees. Here's some of the things to watch out for.
Those Who Maintain 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.
Find the Best Rate
You can probably find a fixed rate around 10% if you have good credit and your score is at least 720. If you're not so lucky, and your score is more like 650, your best bet will probably be something in the mid teens. You can probably find an introductory offer that's less, but those can have risks.
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.
Do the math on any balance transfer fees. They usually run in the 3% to 5% range, but they'll cost you even more if you're unable to pay off your balance before the introductory expiration date. They may not be worth the trouble.
Have a Backup Plan
You'll find yourself in a bind if you don't have a backup card for all new purchases if you opt for the card with the low teaser rate. When the introductory rate expires, any remaining balances will be charged at the higher rate. Put your new purchases on another card that you pay off each month and you won't find yourself in that bind.
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. While it might be tempting to close that account now, or ask to have the limit lowered - don't do it. Unless you absolutely have no discipline when it comes to spending, leave your account open and use it occasionally to continue to build your credit. Closing accounts or lowering limits will hurt your credit score and more weight is put on older accounts when calculating your credit score.
