What to Look for When Selecting a Credit Card: APR, Annual Fee and More

What to Look for When Selecting a Credit Card:  APR, Annual Fee and More
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In order to find the best credit card, you need to understand how credit cards work and what their fine print really says about them. This guide will help you learn what is important to know about a credit card before signing on the dotted line.


Annual percentage rate (APR) is the first thing you should look at when selecting a credit card. The APR, which is basically the interest rate you will pay when you don’t pay off your entire balance, can vary significantly from card to card. The higher your interest rate, the more money you will have to pay each month when you don’t pay off your balance. Look for cards with an interest rate in the single digits if possible.

Annual Fee

Since the credit card companies are already making money off of your interest payments, there is no reason to give even more of your money away on an annual fee charge. Read the fine print to determine how much you will be paying for the privilege of using their credit card - and if it is more than $0, keep looking. There is a better card out there for you.

Rewards Programs

These days, credit card companies are competing harder than ever to get your business. One of the ways that they try to lure you to choose their card is by offering reward programs such as cash back bonuses, airline miles and other free gifts. Sometimes, these reward benefits are easy to measure - such as a 1% cash back reward for all purchases. However, in most cases, it is somewhat more complicated. For example, choosing between 1000 points towards airline miles and 600 points towards gasoline purchases is hard, especially when the “points” may be worth different dollar amounts in real life. Find a card that offers a benefit you will actually use, but don’t choose the reward benefit over the APR or annual fee.

Introductory Offers

Last, but not least, you need to beware of introductory credit card offers. While the card might look amazing with 0% interest, no annual fee, and 2% cash back bonus, read the fine print to determine how long it will really last. Often, low interest rates will only last for the first six to twelve months and annual fees will only be “waived” for the first year. Then, when the card is no longer new and you are not paying attention, the interest rates will return to a higher rate and you will start paying an annual fee on a card you have probably already lost interest in.


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