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How to nd the best credit card
for you
Why should you shop around?
Comparing offers before applying for a credit card
helps you nd the right card for your needs, and
helps make sure you’re not paying higher fees or
interest rates than you have to.
Consider two credit cards: One carries an 18
percent interest rate, the other 15 percent. If you
owed $3,000 on each and could only afford to pay
$100 per month, it would cost more and take longer
to pay off the higher-rate card.
The table below shows examples of what it might
take to pay off a $3,000 credit card balance, paying
$100 per month, at two different interest rates.
APR Interest Months
18% = $1,015 41
15% = $783 38
The higher-rate card would cost you an extra
$232. If you pay only the minimum payment
every month, it would cost you even more.
So, not shopping around could be more expensive
than you think. Here’s how to get started.
1. Decide how you plan
to use the card
You may plan to pay off your
balance every month to avoid
interest charges. But the reality is,
many credit card holders don’t.
If you already have a credit card, let
history be your guide. If you have
carried balances in the past, or think
you are likely to do so, consider
credit cards that have the lowest
interest rates. These cards typically
do not offer rewards and do not
charge an annual fee.
If you have consistently paid off
your balance every month, then you
may want to focus more on fees and
rewards. Always compare the value
of rewards you expect to receive
(and use) each year with the annual
fee you might pay.
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Financial
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2. Know what to
compare
APR Sometimes a credit card
offer lists several rates or a range
of rates, and you won’t know the
rate you’ll get until after you’re
approved. Would you still want
the card if you had to pay the
higher advertised rates?
Fees Compare the fees listed
for each card. Common fees
include a cash advance fee, a late-
payment fee, and for some cards,
an annual fee.
APR for balance transfers If you
plan to transfer your balance from
one card to another, compare the
interest rate you are paying now
with the rate you’ll pay on the
new card after the introductory
rate, plus any balance transfer fee.
Penalty APR Check for a penalty
APR. The offer must tell you what
the penalty rate is, what triggers
it, and how long it would last.
3. Shop around and
ask for better deals
Start your search for a new card
at your bank or credit union. Your
existing relationship may qualify
you for a better offer.
If you have a credit card and
are happy with your service but
think you’re paying too much
in interest and fees, then ask
the issuer to match or beat
the terms and rate on the new
card you’re considering.
Next, compare the offers with
others you’ve received at home or
have seen online.
Only apply for the credit you
need. Applying for too many
cards over a short period can
lower your credit scores.
4. Transfer your
account with care
Most credit cards charge a fee
to transfer your balance. So
even though a zero percent
interest rate on balance transfers
may sound appealing, it may
not be free. Some credit card
companies charge a one-time
fee of 3 to 5 percent of the
balance you’re transferring.
When you move your account,
don’t close your old account right
away. Continue to make at least
the minimum payment while
you’re waiting for the balance to
transfer to the new card.
If you transfer your balance to
a new card, and you feel you’ve
made a mistake after reviewing
your disclosures, you can
generally change your mind if
you act within 10 days after the
credit card company sends your
account opening disclosures.
Contact the credit card company
as soon as possible if you think
you’ve made a mistake.
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Credit card terms to know
APR For credit cards, the annual percentage rate
(APR) is the cost of credit expressed as a yearly
interest rate.
Annual fee A yearly fee that may be charged for
having a credit card. Some card issuers assess the
fee in monthly installments. Some cards do not
have an annual fee.
Balance The amount owed on the account,
including the charges, interest, and fees owed.
Balance transfer fee A fee charged when you
transfer your balance from one card to another. It
may be a at fee or a percentage of the transfer.
Some cards charge zero percent interest on
balance transfers, but if there is a transfer fee, that
means the transfer is not free.
Credit limit The maximum amount that may be
borrowed on a credit card. Some credit card
advertisements offer a credit limit up to a certain
amount – but you may not qualify for the maximum.
Experts recommend keeping your use of credit to
less than 30% of your credit limit, to avoid lowering
your credit scores and making it more expensive to
borrow in the future.
“Go-to” rate Interest rate you are charged after the
introductory or promotional rate.
Grace period The number of days you have to pay
your bill in full before an interest charge is assessed
on purchases.
Introductory or promotional APR Your card
may have a lower APR during an introductory or
promotional period and a higher “go-to” rate after
that period ends. Under federal law, the introductory
period must last at least six months, and the credit
card company must tell you what your rate will be
after the introductory period expires.
Penalty APR The APR charged on new transactions
if you trigger the penalty terms in your credit card
contract, for example by paying late, going over
your credit limit, or bouncing a payment check.
Penalty rates usually are higher than your standard
or introductory rates. If you become more than 60
days late, the penalty APR may be applied to your
existing balance.
Penalty fees Fees charged if you violate the
terms of your cardholder agreement or other
requirements related to your account. For example,
your credit card company may charge a penalty fee
if you make a late payment or if you exceed your
credit limit.
When your rates can rise
Most credit cards have interest rates that change
based on overall interest rates in the economy. This
means that when interest rates rise generally, the
interest rate you pay on your credit card purchases
also increases.
Otherwise, credit card companies cannot raise
your rate for the rst 12 months after you open your
account, unless:
§ There is an introductory rate (introductory rates
must last at least six months) or
§ You are more than 60 days late paying your bill
Your rates can go up at any time after the rst year,
but the credit card company must notify you about
the change in advance.
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About us
The Consumer Financial Protection Bureau
regulates the offering and provision of
consumer nancial products and services
under the federal consumer nancial laws,
and educates and empowers consumers to
make better informed financial decisions.
Learn more at consumerfinance.gov
Connect with us
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consumerfinance.gov/complaint
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consumerfinance.gov/your-story
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