balance to figure out finance charges for each billing period—you must make sure that you choose a low APR credit card to avoid higher interest rates.

 

5. Consider interest rates (fixed vs. variable).

 

If you opt not to choose low APR credit cards, you may consider choosing fixed rate credit cards. Many people-especially those who pay off their balance monthly or those who only use cards for small purchases-opt to use a card that has a fixed rate. Even if the rate is a point or two higher than the usual, it ensures that they can pay off their loan quickly without even noticing the difference. Although a fixed low rate ensures that your rate will stay low, this “agreement” should be reviewed carefully because the low introductory rate may increase drastically after you signed up.

 

6. Do extensive research on credit card fees, transaction fees, and other charges.

 

Fees can be considered one of the profit centers of most credit card companies. Since numerous companies are infamous for charging their clients fees that add up quickly, one should make sure to check the fees section of the credit card disclosure section before signing up. Some of the known fees collected are annual fees and cash advance fees. While other credit card companies charge annual fees for granting your credit, others offer benefits, special services like award programs. Still, it is best to choose credit card with no annual fees and select a card with a reward or cash back scheme.

 

7. Consider the length of “Grace Period.”

 

The term "grace period" refers to the amount of time between the date of a purchase and the date interest starts being charged on that purchase. Also known as "interest-free time," a grace period lets the credit card holder buy time before each payment is made. Most credit cards offer a standard grace period, which means that as long as the person pays for his/her bill monthly, there will be no finance charges. Since not all credit card companies offer a grace period, be careful not to choose them because they might charge interest immediately on every purchase you make. Keep an eye on cards that don’t have a standard grace period because it would force you to pay off your bill at the end of the month.

 

8. Take into consideration other benefits.

 

Of course, who wouldn't want to enjoy other benefits aside from the ultimate convenience a credit card brings? Among the additional benefits offered by credit card issuers are insurance, credit card protection, discounts, rebates and special merchandise. Other benefits also include rewards programs that let you earn points that can give you cash back, free gas, gift certificates and free plane tickets. Before choosing the right credit card for you, you must consider whether or not these offers can make a positive impact on your financial management.

 

9. Make sure you understand all necessary and additional terms.

 

While it is very important for you to identify first your credit card needs, it is equally important for you to understand almost all the underlying terms in credit card application and acquisition. Terms like amount due (the minimum payment for one billing cycle to keep current account); minimum monthly payments that is often interchangeable with the amount due (the smallest payment one can make to keep his/her account current);