Choosing a Credit Card

By, Camaron Crittenden, Adrienne Martinez, Blake Opdycke, Katie Riffe

Standard Cards

● Also called “Plain Vanilla”● Most popular credit card● No security deposit ● No awards● No points

Premium Cards

● The “Gold” and “Platinum” cards● The “upscale” card● Only offered to customers with excellent credit● These customers usually have huge salaries,

heavy spenders, and travel a lot

Charge CardsBusiness charge cards are credit cards that require the balance to be paid in full every month and are only for small business owners with excellent credit. For businesses that heavily rely on credit cards for their expenses, business charge cards may offer more rewards and benefits than regular business credit cards.

Limited Purpose Cards

● Can only be used at certain locations● Minimum payment and finance charge

Example:● Store credit card ● Gas credit card

Secured Credit CardSecured cards can help you manage your credit and spending limits, however they do require a cash collateral deposit which then becomes the credit line for that account. The good news is that your monthly payments will be reported to the major consumer reporting agencies, ensuring that your account history is reported to your credit profile.

Prepaid Credit CardA card issued by a financial institution that is preloaded with funds and is used like a normal credit card. A credit card with a pre-deposited balance, like a store gift card. These are generally used to control spending, for example, given by a parent to a teenager or student. These differ from credit cards in that they require no credit check, nor do the issuers report to credit bureaus. Usually reloadable.

Business Credit Card

● Only for business use● Easy method for users to keep

personal and business transactions separate

Choosing a Credit CardThings to consider before choosing a credit card.

1. Spending habits - What you intend to use the card for (everyday use or emergencies only).

2. Interest rate - The amount you pay to own a credit usually paid monthly or yearly.3. Card limit - Some credit cards have a card limit to what you can spend or hold on a

card. 4. Fees and penalties - If you don't pay on time your interest rate or for the

transactions you may have made, your card could be revoked, suspended or you can simply pay the fees with extra charges.

5. Balance computation method - If your gonna carry a balance you need to find out your finance charge. Take your daily balance divide by the number of days in the billing cycle (stay away from the credit cards with 2 billing cycles they will cost you more).

6. Incentives - These are like reward you get for using their credit card (usually recorded as points). Look for expiration dates and point and limits regarding how many points you can have.

Effects with Different CardsLow interest credit cards - These credit cards start with low interest rates and after a period of time the interest rate, eventually paid off. Usually held by people who make big purchases.Airline specific credit cards - These cards are associated with one airline. Typically, the cardholder accumulates points from both making purchases with the card and by flying on the specified airline.Bad credit or credit repair cards - (prepaid credit cards) These are not credit cards, but are still associated with them . There are no finance charges with these and if you have bad credit you can still qualify for them.

Who Offers Credit Cards?

● Discover● Visa● MasterCard● Chase

Common Credit Card FeaturesCredit Limit: the maximum amount of credit that a financial lender will giveBalance: Amount of charges owedAPR: Annual percentage rate, is the yearly rate of interestCalculated: APR=2*n*I/P(N+1)Grace Period: allows payment to be received for a certain period of time after the actual due date, usually last for 15 daysFees: Some issuers charge a fee for using a particular cardLiability Limits: In case your card is stolenIncentives/awards: Kohls cash, Disney Perks, Gas points

The Hidden CostsAnnual Fee:The fee a credit card company charges for the use of their credit card.Credit Limit:The maximum amount of money the lender is willing to loan an applicant.Finance Charge:The total cost of using credit, including interest and fees.

Origination Fee:The charge for setting up a loan (often associated with home loans).Loan Term:The length of time you have to pay the loan. Remember: the longer the loan, the lower yourmonthly payment, the greater the interest paid

Grace Period:The length of time that the lender charges no interest on money borrowed when payingoff your balance in full each month.Annual Percentage Rate:The cost of the loan each year expressed as a percentage. All lenders arerequired by law to calculate APR the same way

Tips on Buying Credit Cards

Understand your card's anti-skimming features-Credit cards come in different flavors, from the

traditional card with the magnetic stripe to virtual versions of cards in smartphones. And, they all come with their own security features, some better than others.

Know your fraud protections-The protections are not the same, or as good, for debit cards. You could have

unlimited losses, depending on how long it takes you to report your card lost or stolen.

Think before you swipe-Make a habit of thinking twice before you swipe your credit cards. You can even take

some simple steps to avoid automatically charging purchases

Keep a budget-The reason it’s so easy to lose track of credit card spending, for most of us, is that the money is not

coming out of our checking account.

How to get Lower Interest Rates

● Shop around to different card companies to find better deals

● Start with your oldest card company● Call and ask● Be persistent

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