3 Numbers You Must Know Before Applying for a Credit Card

If you are only looking at rewards points and annual fees, you could be making an expensive mistake when choosing a credit card.

Mar 23, 2014 at 10:45AM

With so many great cards on the market, it can be difficult to find the absolute best credit card available.

The celebrity spokesperson might get your attention or you might be smitten by all those bonus rewards points you get for signing up. Before you make a decision based on a card's bells and whistles, and once you've checked your free credit score, be sure to take a closer look at the nuts and bolts.

You should never sign up for a credit card unless you know these three numbers.

Interest rate
Most credit card applicants are savvy enough to check the interest rate (the APR). This is the percentage you pay to the credit card company for the privilege of borrowing their money.

The interest rate may not be important if you pay off your balance monthly. If you expect to keep a balance, though, you'll want to find the lowest rate possible. Once you get into double-digit rates, you'll find the amount you are paying in interest begins to add up quickly. (And, if it's a cash-back rewards card, the interest you pay will most likely be higher than the cash back you earn.)

Most cards have more than one interest rate. Before submitting any application, look for all of the following:

  • Purchase interest rate
  • Cash-advance interest rate
  • Balance-transfer interest rate
  • Promo rates

Promo period time frame
Speaking of promo rates, you need to know how long the introductory rate will last. Some cards may advertise themselves as zero-APR credit cards, but that may be a special rate for the first few months only. After that, the rate could jump to double digits.

Knowing how many months you have for a promo period is especially important if you are comparing balance-transfer offers. You need to know exactly how many months you have to pay off the balance before you start getting hit with interest.

Perhaps more importantly, you should know the promo period for store-branded credit cards that offer same-as-cash financing. If you miss paying off the balance before the promo period ends, some cards will retroactively apply all the interest from the date of purchase.

Grace period
Finally, you need to know a card's grace period. This number is most important for those paying off their balance each month. Grace periods do not apply if you carry a balance. If you carry a balance, interest is charged on every purchase from the time it is posted to your account until it is paid off.

The grace period is the time between the end of your billing cycle and the date your payment is due. Although credit card companies aren't legally required to provide grace periods, most do as a courtesy to their customers.

While the law doesn't require grace periods, it does require companies offering them to send out a statement at least 21 days before payment is due and interest begins to accrue. That means you might see grace periods as short as 21 days. However, 25 days seems to be more typical, and of course, the longer the grace period, the better.

When looking for the best credit card, you need to look at more than rewards points and cash back offers. Make sure you understand the interest rates for all the various ways you can use your card. Then, double-check the credit card offer for promo periods that might expire before you pay off a balance. Finally, look for a card that offers the longest grace period possible.

With a little time spent comparison shopping, it won't take long to find the perfect credit card to keep your costs low and your rewards high.

The original article: 3 Numbers You Must Know Before Applying for a Credit Card appeared on WisePiggy.com

About that credit card in your wallet...
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Additional money saving articles can be found on WisePiggy.com

Find the right credit card to suit your needs

Can an employer pull your credit report?

5 ways to pay your credit card bill on time 

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information