Credit Limit
The first of many credit card features that you should consider is the credit limit. This is the maximum amount of money that you are allowed to charge to the card. You can do this all at once or over time. This variable is determined by your credit score, which is a composite determination of your ability to pay the balance or minimum payment based on your income as well as the history of your payment behavior. Basically, the more consistent your payment history and the lower your credit liability, the better your score, and hopefully the higher your limit will be.
APR
Your APR, or Annual Percentage Rate, is one of the credit card features that might not necessarily be determined by your credit score. In fact, this variable is often pre-determined by a bank or credit card company who then uses your credit score to decide whether or not you are eligible for the rate. The APR is always divided by twelve, which is what then will tell you what your interest is every month. You need to use this to determine how much money you should actually pay every month, as opposed to simply just the minimum.
Minimum Payment
Every card has one of these credit card features, which is a minimum payment that is due every month. The most basic way to describe this amount is that it is determined by taking an arbitrary amount that is decided by the bank as well as a service charge. They also take into consideration your credit limit, as well as your annual percentage rate. According to the new credit card regulations, your credit card company is required to inform you of how long it will take to pay down your entire balance if you only make the minimum payment. They may also supply you with suggestions for paying it down sooner.
Grace Period
Many card features include a grace period on new purchase. This is actually a very beneficial characteristic that can provide no interest on purchases as long as you pay them off within the grace period. The grace period is often up to two weeks after you make the purchase. This can be your best friend if you are very responsible with your money as you will never have to pay interest on new purchases.
Every minimum payment that you are required to make will also have a grace period. This will always be the same amount of time every month and it is basically designated to take into account how long it might take for you to mail a check to the bank that holds your credit card balance. It can be anything from five days to two weeks.
Balances
Many cards feature several different interest rates depending on the types of balances your card carries. This is one of those features that many people fail to truly investigate and understand. For instance, many cards will advertise a low rate, sometimes even as low as 0% on things like balance transfers. However, there might be a much higher rate on standard purchases or cash advances. You need to understand exactly how many balances your card carries and what type of interest rates are assigned to each balance. This can be very confusing because your statement will often only list the total amount owed.
Fees
Fees belong to that family of credit card features that no one really wants to talk about. However, it is very important to understand the potential fees you could face if you don’t maintain your card properly. For instance, you will likely have to pay a fee if you miss your payment. Sometimes, you are required to pay a fee depending on your method of payment! Some cards have an annual fee, which is automatically added to your balance once a year, so you don’t have to pay it all at once if you don’t want to. There may also be fees associated with cash advances or balance transfers. You have to read the fine print to see how these are defined with your card.
Incentives and Rewards
Incentives and rewards are the features that people love the most. In fact, these are the particular characteristics that attract people to the different kinds of credit cards. Which bank you choose, and furthermore which financial program you choose, will often be determined by incentives and rewards they make available to you. Affiliate programs like airlines are some of the most popular programs, which offer rewards like Frequent Flyer miles.
