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A lot of credit card plans allow the issuer to change your APR based on changes in interest rates or other key economic indicators -- called indexes change. Such rate is linked to the index's performance. These plans are also known as "variable rate" programs -- due to the inbuilt variation feature. The finance charge will be raised or lowered based on rate changes. Variable plan providers must also disclose additional information, such as the way the rate would change and how the rate is determined (which index is used, what additional amount, the "margin" used, etc.)
Fees. You must know whether your issuer charges an annual
membership fee. This is an important term to pay attention to when you
compare credit card offers as such fees can range from $25 to $100 or
Method for balance computation. When you compare credit card offers, pay careful attention to the method for balance computation. This can make a big difference in how much you will incur. There are several methods used for balance computation; these include "average daily balance," "adjusted balance," "previous balance," "two-cycle balances," etc. FTC has compiled a brief explanation of each of these methods.
If you don't understand how your balance is calculated, ask your card issuer. An explanation must also appear on your billing statements.
Other Costs and Features. Other costs and features that you need also play an important role when you compare credit card offers. In addition, you may also consider if the credit limit is high enough. A credit card application's disclosure is the best place to research detailed information. The initial time spent to compare credit card offers will go a long way in saving you money.
This article was adapted (and modified) from:
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