Credit cards make big promises - cash back, free vacations, zero interest and more. However, if you are not reading the fine print, you might find that you get more than you bargained, according to a San Francisco Chronicle report.
The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 made changes to how credit cards communicate their policies to you, but many companies still shuffle important facts into the fine print. If you want to find the best credit card, make sure you don't overlook details.
Compare credit cards by fees
Ultimately, your credit cards should offer convenience while extending your purchasing power. Make sure you maximize your credit potential by selecting low-fee cards. As you review credit card offers, keep your eyes open for these five factors:
- Annual Percentage Rate (APR): On many credit card offers, the APR is advertised front and center. That's because these are often teaser rates or introductory rates that will expire in a few months. In addition, most cards have separate balance transfer APRs, cash advance APRs and penalty APRs that can be applied if you are late on even one payment.
- Annual Fee: Just a few years ago, it seemed as though annual fees were disappearing. With the credit crunch of the Great Recession, they are making a rebound. As of Feb. 22, the total of all non-penalty fees - such as annual fees and maintenance fees - cannot be more than 25 percent of the initial credit line, according to the CARD Act.
- Maintenance Fees: In addition to annual fees, some credit cards institute maintenance fees. These include set-up fees, participation fees, and fees for additional cards. Of course, the best credit card offers are the ones that do not include these extra costs.
- Transaction Fees: For some transactions, you may have to pay more than just the APR. Credit cards may charge balance transfer fees, cash advance fees and foreign transaction fees. These fees are often a percentage of the total transaction and may be subject to a minimum fee regardless of the transaction amount.
- Penalty Fees: As you compare the best credit cards, check out penalty fees as well. These include late payment fees, over-the-limit fees and returned payment fees.
A good card is in the details
Whether you are looking for the best secured credit card or the best rewards credit card, there are other details to consider. While rates and fees are important, you also need to know how they are calculated. Look for cards with long grace periods --the period between when you make a purchase and when the credit card company begins charging interest.
If you are in the market for a rewards card, understand how rewards are calculated and how points can be redeemed. For example, the best travel credit cards don't restrict your travel plans with excessive blackout dates.