Your APR (Annual Percentage Rate) is basically the interest you pay for purchases made on your credit card. Some cards will offer an introductory APR of 0% for a period of time before they begin charging interest for purchases. APRs are determined by your credit profile. A fixed APR cannot be changed without notice. A variable APR can change whenever the index on which the rate is based changes. To avoid paying interest pay off your entire statement balance before or by the due date.
So if your statement balance is $200 pay that $200 off by your due to avoid paying interest.
Annual fees can really put a cramp in your budget plans when they hit your statement. Some cards charge an annual fee at the opening of your credit card. Others begin to charge you after the first year. Some cards don’t charge annual fees which of course is the most ideal. Be sure to be aware of these fees before applying.
Balance Transfer (Introductory APR, Fees)
Balance transfers come in handy if you need a lower APR for an existing balance. For example, let’s say you have a $1000 balance on a credit card with an introductory APR of 0% for the first 12 months. After those 12 months are up you would have to pay whatever APR was specified in your agreement. However, your 12 months is almost up and you need a few more to pay down your $1000 balance interest free. You could open another credit card that assumingly offered either a lower APR for balance transfers or a 0% introductory APR for balance transfers. Transferring your balance would enable you to pay down your balance within your means. Keep in mind that some credit companies do charge a onetime balance transfer fee. Read all of the stipulations before transferring. If you do decide to go this route, make sure that you submit your transfer almost a month before your deadline (with your previous card). Balance transfer can take a few weeks to complete.
Other ways to transfer a balance:
Another thing to consider is transferring that balance to an existing credit card. Some credit cards periodically offer balance transfer promotions. If the promotion is worth it, you can use that offer instead of opening an entirely new CC account.
Foreign Transaction Fees
Foreign transaction fees are fees that are charged for using your credit cards outside of the country. Some credit cards do not charge this fee which allows you to travel and make purchases without that concern. If you plan on leaving the country be sure to take the appropriate card(s) with you. If you don’t own a card that doesn’t charge a transaction fee be sure to find out what those fees are.
Your statement close is always after your payment due date. For some cards it’s the day after. For others, it’s 2 to 3 days after. Once your statement closes a new statement for the following month is generated. Knowing when your statement closes can help you out in a few ways. Let’s say your minimum payment is due on the 8th however you would like to pay the entire balance due (if more than the minimum). You only have enough to pay the minimum on the 8th, but will have the remaining on the 10th. If your statement closes on the 11th you can still pay the remaining balance on the 10th (the 11th at the latest) and that amount will be credited to your account before the next statements cuts giving you a $0 balance. Now this can be little risky if the statement close is on the weekend or if you make the payment after the daily payment cutoff time (check with your credit card company).
Utilization is the percentage of available credit being used. Keeping your credit card balances under 30% of your credit lines will help keep your credit scores in check. If you have a credit card with a $2,000 credit line keep your balance under $600. You can figure out your utilization by dividing your balance by your credit line.
$600 divided by $2,000 is 0.30 (30%)
If your balances are higher that 30% do your best to get them under.
CLI (Credit Line Increase)
Getting a credit line increase can help your utilization. If your balance is over 30% a sufficient credit line increase could lower that percentage. They also can help if you plan on making a large purchase on that particular card, but need a higher credit limit. Most credit card companies let you request a credit line increase online. Most will give you an instant decision. Be mindful that some companies will require another credit check before making a decision. They will notify you before going through with the process. If you don’t want to take that hit on your credit report, then don’t apply.
Just about every credit card offers some type of rewards. Some offer cashback and some offer points that can be redeemed for a variety of things including travel, gift cards, and cash. For example, Chase Sapphire allows you to transfer your points 1:1 to certain airline and hotel rewards programs. So if you have 2,300 Chase points you can transfer 2,000 of those rewards to an airline or hotel partner. Don’t worry, you don’t lose the other 300 points. It remains in your account. Chase only allows you transfer points in multiples of 1,000.
How Too Many Cards With Balances (low or high) Effect Your Score
There’s nothing wrong with having a variety of cards. However, this can create a problem if you’re carrying a balance on multiple cards. This can lower your credit score (until some of those balances are at $0). Let’s say you have 5 or more cards theoretically no more than 3 of those cards should be carrying even a small balance. I would personally suggest keeping no more than 2 reporting at all times. Keeping track of your statement close dates for all of your cards can help you monitor how and when they will report.
In conclusion, there are quite a few things to consider when choosing the right card(s). Do your research and manage them properly for the maximum benefits.