Credit Card Offers

Credit card offers may be piling up in your mailbox, but how do you determine which ones to keep and which one to toss? A close look at the fine print can help make sure you get credit cards that fit your financial needs.

Before you can sort out the good credit card offers from the bad, it helps to understand how credit card companies make their money. A financial institution like Chase or a retailer like Sears offers customers a line of credit that can be used to make purchases. This can be a great way for consumers to make purchases for large items that they otherwise couldn’t afford all at once. It’s also more convenient than carrying around cash or balancing your checkbook after every purchase. This convenience, of course, comes with a price.

The lending organization makes its money through fees and interest rates. These costs vary greatly between credit cards and will often be lowered or waived to entice new customers to use a particular card.

Credit card comparisons can be difficult, especially if they have different incentives that are hard to compare. It’s important that you have a realistic idea of how much you charge per year, and how much of a balance you carry over each month, to help you determine what type of card you need. Before accepting any credit card, you should calculate how much that card will cost you per year given your average use.

Factors to consider when comparing credit cards include:

• Interest Rates. Many credit card companies will try to lure you in with low rates for an introductory period, but then raise those rates drastically a few months later. You can also lose introductory rates if you are late or miss a payment.

• Transfer Fees. Want to move your current credit card balances onto your new card with the low interest? Watch out for transfer fees. These fees often range from $10 to three percent of your total transfer.

• Late Charges. These costs can hurt your wallet in more than one way. First, your credit card company charges you as much as $30 for being late on your payment. Then, it raises your interest rate because of the late fee. Make sure your credit card offer spells out exactly what the terms are regarding late fees and that it’s something you can live with.

• Annual Fees. Some card companies charge an annual fee just for the privilege of carrying its card. This fee is usually collected even if you don’t have a balance on the card.

• Payment Plans. Credit card offers may include a no-payment period of six months to a year. In theory, this lets you pay off your purchases without earning any interest, allowing you to pay down your balance easily. But in some cases, interest may accrue during the time, meaning that a year’s worth of interest will be added to your account all at once.

• Reward Points. Points that can be used for purchases are a common incentive for new card owners. Commonly used for travel rewards or retail discounts, these points are added to your card as a thank you for opening the account.

If you are tired of sorting through all the credit card offers or nervous about the potential for identity theft, you can opt-out of the mailing lists that credit card companies use by calling 1-888-5-OPTOUT or by visiting optoutprescreen.com. You will have to share personal information like your name, address, and Social Security number to use this system.

You can also refuse credit card offers by writing a letter to all three credit reporting companies who sell your personal information to companies. Just send a short letter with your personal information to:

Equifax, Inc. Options PO Box 740123 Atlanta, GA 30374-0123

Experian Consumer Opt-Out 701 Experian Parkway Allen, TX 75013

TransUnion Name Removal Option P.O. Box 505 Woodlyn, PA 19094

It may take a few weeks to see a difference in the amount of credit card offers you receive.

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