7 things to consider when applying for credit cards

Make sure you know all the fees and different types of interest rates when you apply.

10:28 24 May 2013

Students received some good news that tuition rates might be fixed around the £6,000 mark. If that happens, financial planning will be a lot easier for students. Unlike limited fees though, most of us have to deal with the ever-fluctuating interest rates and fees of our credit cards and loans.

 

Here are some of the fee types and interest rates types you can expect to encounter with your credit cards:

 

•    Late fees—these are self-explanatory. If the company receives the payment after the due date, you may be assessed a late fee. Other penalties may occur as a result of one or too many late fees.

 

•    Annual fees—these can be doled out in a number of ways including one lump sum once per year, broken into monthly amounts, or quarterly amounts.

 

•    Inactivity fees—strangely enough you could be charged a fee for NOT using your credit cards. Usually if this is the case, you can purchase something inexpensive such as breath mints and it will satisfy the requirement. Other companies have a minimum expenditure amount in order to avoid the fee.

 

•    Over the limit fees—again these are self-explanatory. If you balance goes over the credit limit, you can be charged a fee. It’s a good habit to make sure you leave enough room in your credit limit to cover any applicable finance charges.

 

•    Introductory interest rate—these are limited time special interest rates that go to a normal rate after a set period of time.

 

•    Regular interest rates—these are what is typically stated in the terms of credit cards as that APR or what would be the normal rate after the introductory rate has expired.

 

•    Default or penalty rate—this may occur if certain terms have been violated. Each company is different so it’s essential to read the terms of credit cards so you know what might cause you to receive the much higher penalty interest rate.