When your credit rating is good, credit card companies stuff your mailbox with credit card applications. Consumers with especially good credit can get several offers a day, every day. When you are given so many options, how do you decide which credit card offer is the best one for you?

Start by paying no attention to any of the promotional offers. Those low, low interest rates are only introductory rates. After about six months, the honeymoon period ends and the interest rate shoots up to the real, double digit interest rate. Check the small print or the deliberately boring chart on the back of your credit card applications for the real interest rate. Sort your offers by interest rate, and give serious consideration only to the offers with low regular interest rates. The exception is promotional offers offering you a low rate for the life of the loan. If you have a large balance to transfer off another credit card, and you do not plan to charge any purchases to the card after you have transferred the balance, then this kind of promotional offer can be an excellent way to get a low interest rate on a large outstanding balance. However, any charges you make to the card after the introductory period have a much higher interest rate, and any payments you make to the credit card company are applied to your lowest interest rate balances first. Before you can start to pay off the charges you made at a higher interest rate, you must completely pay off the original sum you transferred onto the card. During the months or years it takes you to pay off the original sum, the new charges will accrue hefty interest, all of it money in the credit card company’s pocket. Consider this kind of promotion only if you need to roll a large balance onto a card with a lower interest rate, not if you are looking for a credit card to use on a regular basis. When you have a selection of credit card applications with attractively low rates, consider their default rate. The default rate is the interest rate you will pay if you make a payment late, run over your credit limit, default on your credit card, or make a number of other credit mistakes. It can be ridiculously easy to trigger the default rate, so even if you are a punctual bill payer, give careful thought to the cards’ default rate. Select the lowest default rate you can find. When you have a selection of credit card applications with excellent regular and default rates, now is the time to consider all the promotional offers and extra goodies the companies are offering. You can get some fantastic perks from companies that are eager for your business. Then fill out the credit card application for the best card, drop it in the mail, and use your new credit card with confidence.

This entry was posted on Thursday, April 23rd, 2009 at 7:18 am and is filed under Credit cards for bad credit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.