The Little Guy's Revenge

Before you start shopping for a credit card, you should know and understand some important terms you'll encounter in credit-card brochures or discussions with potential lenders:

· Annual fee - A flat, yearly charge similar to a membership fee Many companies offer "no annual fee" cards today, and lenders who do charge annual fees are often willing to waive them to keep your business.
· Finance charge - The dollar amount you pay to use credit rather than cash
Besides interest costs, this may include other charges such as cash-advance fees, which are charged against your card when you borrow cash from the lender. (You generally pay higher interest on cash advances than on purchases -- check your latest bill to find out what you're paying for this service!)

· Grace period - A time period, usually about 25-28 days, during which you can pay your credit-card bill without paying a finance charge

Under almost all credit-card plans, the grace period only applies if you pay your balance in full each month. It does not apply if you carry a balance forward (leave unpaid charges on your account). Also, the grace period does not apply to cash advances.

· Annual percentage rate (APR) - The yearly percentage rate of the finance charge
Interest rates on credit-card plans change quite significantly over time. Some of these interest rate adjustments are connected to changes in other interest rates, such as the prime rate or the Treasury Bill rate, and are known as variable-rate plans. Others are not specifically tied to changes in other interest rates and are known as fixed-rate plans.

· Fixed rate – An unchanging (at the time of use) annual percentage rate of the finance charge

· Variable rate - Prime rate (which varies) plus an added percentage (For example, your rate may be PR + 2.9 percent.)

· Introductory rate - A temporary, lower APR that usually lasts for about six months before converting to the normal fixed or variable rate. This is usually a way to get the consumer to get in the habit of using a particular card.

· Experts say that if you're smart, you'll do the same kind of comparison shopping for a credit card that you do when you're looking for a mortgage or a car loan. This is a good idea because the choices you make can save you money. The process is not a simple one -- here are some tips that should help you get started:

1. Do some research - There are an abundance of places, both online and offline, where you can get information about credit-card offerings and even get credit-card ratings, but since rates and plans change so frequently, it's a good plan to call the companies you're interested in to confirm the data and to see if there are other plans that might work better for you.

A reliable and non-commercial resource is the Federal Reserve Board. Another great source is the non-profit consumer credit organization U.S. Citizens for Fair Credit Card Terms, which offers credit-card ratings from its research (and so do a lot of other commercial organizations -- many of whom are also credit-card related companies).

2. Make a list - Make a list of credit-card features that fit your personal needs and rank the features according to how you plan to use the card and pay your monthly bill.

3. Review the plans - Review all of the information you've gathered on different plans. Pay special attention to the Average Percentage Rate (APR) - - you want a low rate, but not necessarily the lowest. This is because, depending on your lifestyle and payment habits, you might benefit more from a card that offers cash rebates, discounts,frequent-flier miles or other rewards programs.

4. Check out credit unions - Look into the possibility of joining a local credit union. Credit unions are non-profit organizations, and they have lower overhead so they can charge lower interest rates. Credit unions are newer to the credit industry so they are eager to generate credit-card loans. However, you'll probably be required to open a share account or minimal balance savings account to join.

Credit unions typically are limited to a particular employer and its employees, but that's changing. Due to industry consolidations, credit unions are rapidly expanding their fields of membership. To find out which credit union you may be eligible to join, contact the Credit Union National Association (CUNA).

5. Compare plans - If you already have a credit card, be sure that you're making a good move before you change cards. If you are a current cardholder and have a good credit rating, see if the institution that issued your card will lower your current rate. Don't be afraid to negotiate!

These are steps to take when deciding on a credit card. But your actual breadth of options depends in great part on your personal credit history.

You need a credit card?

Are you sure?

Ok then, here is a great website with a bunch of different credit cards for you to consider. DO NOT BOTHER to even apply for one if you cannot pay your balance off each month because you will just be hurting yourself if you do.

If you honestly think you can handle a credit card, take a look. There are some great companies, great rewards cards and great deals here.