Your Money_ The Missing Manual - J. D. Roth [75]
In either case, keep the following in mind:
Take time to do research. Your goal is to find the card that best fits your situation, so don't just sign up for the first offer that comes in the mail. You can research cards at:
CardRatings.com, which has a searchable database of credit cards, a blog with tips and news, and a forum where folks can write reviews of the cards they use.
IndexCreditCards.com, which lists over 1,200 different cards and offers tips for using them wisely.
BankRate.com, which has a bunch of online calculators to help you choose the best card for you.
FatWallet.com, which has a great "What credit card should I get?" discussion at http://tinyurl.com/FW-credit.
Check with your credit union. If you belong to a credit union (Credit unions), you may be able to get a great deal on a card. A 2009 study from Pew Charitable Trusts (http://tinyurl.com/PCT-credit) found that "credit unions offered significantly lower advertised rates compared to bank credit cards, with penalty fees that were half the cost of comparable bank fees and fewer dangers associated with 'unfair or deceptive' practices." In other words, credit unions rock.
If you're after a rewards card, choose one that offers something you value. Some give you frequent-flyer miles, others points. If these appeal to you, great. But there's no sense in earning stuff you'll never use, so don't forget cash rewards. Cash is versatile and, unlike frequent-flyer miles, never expires.
Watch out for extra fees. Some fancy cards will give you all sorts of perks—for a price. You're usually better off with a no-fee card than paying $20 or $50 (or more!) every year for features you hardly use.
Look for more than just a low interest rate. Though it sounds like gibberish, a credit card's "method of computing the balance for purchases" is important. Look for cards that calculate your interest using either "average daily balance" or "adjusted balance."
Tip
Tired of getting credit-card offers in the mail? You can stop them by calling 1-888-5-OPTOUT or visiting OptOutPrescreen.com. This method, endorsed by the Federal Trade Commission (FTC), is the best way to stop such offers.
Don't be a sucker. Don't sign up for a card just to get a free t-shirt, Frisbee, or airline ticket. And don't choose a card just because it offers a sign-up bonus or gives you a discount at your favorite store.
Don't overdo it. There's no reason to carry a dozen cards. The fewer cards you have, the less there is to worry about. Start with one. If you discover you need another card, get it. But don't just load up your wallet with plastic for the heck of it.
Once you decide on a card, be sure you understand its limitations. Remember: Your goal is to pick a useful tool. You're not looking for a one-time bonus, but rather a long-term relationship you can live with.
On The Money: Getting More from Your Credit Cards
Credit card contracts can be daunting. I opened an American Express account in 2008; the fine print on that contract would have taken up nearly a fifth of this book, but I read it all. When I had questions, I called customer service to get answers. By doing this, I learned how my credit card really worked—both for me and against me.
Boring as they may be, you should always read financial contracts—even for credit cards—not just to protect yourself, but also to know your rights. Most people don't realize their credit cards may offer a host of extra features, such as:
Shopping protection. Your card may give you extended warranties, price-drop protection, limited purchase insurance, and even satisfaction