The All-Important Plan
Now we come to the core of the credit card selection process – which plan to choose. The costs and terms of your credit card plan can make a difference to how much you pay for the privilege of borrowing (which is what you’re doing when you use a credit card).
Finance charges on credit cards issued by a National Bank can be quite costly. National Banks can export the rates in the states they are domiciled in to other states and the states they are domiciled in do not have any maximum rates. They can, therefore, charge whatever rate they contract for. They also have in their contractual agreements that the rates are subject to change. If they do change their rate, they must notify you at least 15 days before the rate becomes effective.
Credit card issuers must make disclosure on all of the terms in their agreement. In the disclosure form from the credit card issuer (usually a small, fine print brochure), look closely at the credit terms we discussed earlier. Don’t forget about specifics like late charges (usually $15-$30) and over-the-limit fees (around $20-$25). Consider these factors along with how you pay your bills each month.
For example, if you always pay your monthly bill in full, the best type of card is one that has no annual fee and offers a grace period for paying your bill before finance charges kick in. If you don’t always pay off your balance each month (and 7 out of 10 American card holders fall into this category), be sure to look at the periodic rate that will be used to calculate the finance charge.