As holiday merchandise begins to mount on store shelves, so too may credit card offers in your mailbox. Before proceeding with a credit card application, be mindful that not all credit cards are created equally.
A recent consumer advisory bulletin from Iowa's Attorney General Tom Miller recommends if you are "shopping" for a credit card that you check the card's fine print on the following items:
- Interest rates. Pay attention to the annual percentage rate of interest (APR). Very low advertised rates are usually only "teaser" or "introductory" rates. When the teaser period ends, the APR often goes to a higher, "go-to" rate.
- Late fees. Credit card companies cannot charge you a fee of more than $25, unless one of your last six payments was late, in which case your fee may be up to $35; or credit card companies can show that the costs they incur as a result of late payments justify a higher fee. Credit card companies cannot charge a late fee that is greater than the minimum payment. So, check late fees and other penalty rates and terms.
- Hidden fees. Avoid cards with an annual fee and expensive "add-on" items such as "free trial" credit card protection plans, insurance, and buyers' clubs. Consider Iowa-issued cards because they have greater protections and cheaper fees.
Credit cards have their place in your wallet, but need to be managed carefully to avoid financial disaster. Much financial distress can be avoided by paying your balance on time and in full.
For tips on managing credit from the Federal Trade Commission, click here