Choosing a Credit Card Right for You

A credit card, used responsibly, can help us establish good credit habits and boost our credit score. It can also be a convenient way to shop, help us out in an emergency, and even provide extra savings through rewards programs.

For most of us, there are no shortage of offers from retailers, finance companies and financial institutions inviting us to apply for a new credit card. While these offers may sound good, each comes with different costs and payment policies.

When weighing offers for credit, you want to choose wisely and pick the one right for your financial situation. But how do we know which offer is a good deal and best option?

• Ask yourself why you are looking to take out a new credit card or accept an offer. What is your motivation?
• Be honest about your money management habits. Are you the kind of person who will pay the card in full each month or carry a balance from month-to- month? If you are likely to carry a balance, you’ll want to shop for a card with the lowest annual interest rate possible.
• Opening a new credit card or financing a new purchase should be a planned decision and not done on impulse. Each time you apply for credit it results in a hard inquiry on your credit history and can lower your credit score, which can take up to six months to recover the points on your credit score.

Are you looking to build credit?

• Do you want to have a back-up credit card?
• Will the credit help you finance something you want to purchase?
• Do you want to earn rewards for your purchases?

Here are some things to look for when shopping for a credit card:

• Application Fee – most cards will not charge fees to apply. If they do, you may want to avoid.
• Annual Fee – many cards do not charge an annual fee. Those that do, like premium cards and travel cards, will charge a flat fee.
• Processing Fee – this is uncommon but may be charged if someone fails to qualify for an initial offer. Best to be avoided.
• Interest Rate Increases – Read the fine print to see if interest rates increase on unpaid balances of if payments are late.
• Grace Period – Find out the number of days between a purchase and when a credit card company begins charging interest. For people who pay their cards in full each month, a longer grace period may be more important than a lower interest rate.
• Balance Transfers – Some cards don’t charge fees for an initial balance transfer from another card but will treat others as cash advances making them subject to fees and immediately charge interest.
• Qualifying for Rate Offers – If you are responding to a card offer, check to see if the advertised interest rate is restricted to applicants with the highest credit scores.
• Finance Charge Schedule – Since rates can vary for different types of card usage, you’ll want to review the finance charge schedule.
• Fine Print – To avoid surprises when it comes to fees, interest rate changes and credit card policies, you’ll want to review the fine print.
• Rewards – Reward credit cards can bring extra savings for simply using your card, but the cost of higher interest could outweigh the benefit if you carry a balance each month.

Credit unions like Town & Country offer credit cards with the same features and benefits of many national credit cards but typically lower interest rates and fees, coupled with local customer service.