Ok ok…we give up. We’ve tried to film part 2 of our credit card series about four different times. In between the equipment snafus, bad weather, and other problems, we give up. So instead, I’m going to be blogging this episode, only because it involves many definitions and because it could translate easily into text. But don’t worry, we did record episode 3 successfully. It will be online shortly.
So here’s the rundown. Now that that you’ve selected a credit card, its time to decipher the fine print to see if the card really is a good deal. Every credit card is required to include terms and conditions of the credit card. Credit card companies try to make it look as confusing as possible, but I’m going to break down the most important terms you need to know:
APR, or Annual Percentage Rate, is the single most important number. It tells what rate of interest you’ll be paying on your credit card balance every month. Lenders do need to make some money off of you, so they charge you a certain percentage to carry a balance on your card.
There will also be an APR listed for cash advance and default. Cash Advance APR means how much interest you will start accruing immediately for borrowing cash from your credit card. That is never a good idea if you can help it. Default APR means how much interest you will be paying if your stop making payments.
Grace period is how many days you have to pay your bill before you start accruing interest on your balance.
Fees – There will be fees for balance transfers, late payments, over-the-credit-limit fees, and international transactions fees. The lower the number and amount of fees, the better.
Another thing to note is that some credit card companies will disguise add-on services as part of the card, like waiving payments if you become disabled. These add-ons are a pure moneymaker for the lender and are of no benefit to most people. Avoid these if possible.
With this information, and the information from episode one, you’ll be able to select and apply for a credit card. In the last episode in this credit card series, we’ll talk about what to do with your new found credit.
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