How to find the best credit card
for you
Why should you shop around?
Comparing offers before applying for a credit card
helps you find the right card for your needs, and
helps make sure you’re not paying higher fees or
interest rates than you have to.
Consider two credit cards: One carries an 18
percent interest rate, the other 15 percent. If you
owed $3,000 on each and could only afford to pay
$100 per month, it would cost more and take longer 1. Decide how you plan
to pay off the higher-rate card. to use the card
The table below shows examples of what it might You may plan to pay off your
take to pay off a $3,000 credit card balance, paying balance every month to avoid
$100 per month, at two different interest rates. interest charges. But the reality is,
many credit card holders don’t.
If you already have a credit card, let
APR Interest Months history be your guide. If you have
carried balances in the past, or think
18% = $1,015 41
you are likely to do so, consider
15% = $783 38 credit cards that have the lowest
interest rates. These cards typically
do not offer rewards and do not
The higher-rate card would cost you an extra
charge an annual fee.
$232. If you pay only the minimum payment
every month, it would cost you even more. If you have consistently paid off
your balance every month, then you
So, not shopping around could be more expensive may want to focus more on fees and
than you think. Here’s how to get started. rewards. Always compare the value
of rewards you expect to receive
(and use) each year with the annual
fee you might pay.
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2. Know what to 3. Shop around and 4. Transfer your
compare ask for better deals account with care
APR Sometimes a credit card Start your search for a new card Most credit cards charge a fee
offer lists several rates or a range at your bank or credit union. Your to transfer your balance. So
of rates, and you won’t know the existing relationship may qualify even though a zero percent
rate you’ll get until after you’re you for a better offer. interest rate on balance transfers
approved. Would you still want may sound appealing, it may
If you have a credit card and
the card if you had to pay the not be free. Some credit card
are happy with your service but
higher advertised rates? companies charge a one-time
think you’re paying too much
fee of 3 to 5 percent of the
Fees Compare the fees listed in interest and fees, then ask
balance you’re transferring.
for each card. Common fees the issuer to match or beat
include a cash advance fee, a late- the terms and rate on the new When you move your account,
payment fee, and for some cards, card you’re considering. don’t close your old account right
an annual fee. away. Continue to make at least
Next, compare the offers with
the minimum payment while
APR for balance transfers If you others you’ve received at home or
you’re waiting for the balance to
plan to transfer your balance from have seen online.
transfer to the new card.
one card to another, compare the
Only apply for the credit you
interest rate you are paying now If you transfer your balance to
need. Applying for too many
with the rate you’ll pay on the a new card, and you feel you’ve
cards over a short period can
new card after the introductory made a mistake after reviewing
lower your credit scores.
rate, plus any balance transfer fee. your disclosures, you can
generally change your mind if
Penalty APR Check for a penalty
you act within 10 days after the
APR. The offer must tell you what
credit card company sends your
the penalty rate is, what triggers
account opening disclosures.
it, and how long it would last.
Contact the credit card company
as soon as possible if you think
you’ve made a mistake.
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Credit card terms to know Penalty APR The APR charged on new transactions
if you trigger the penalty terms in your credit card
APR For credit cards, the annual percentage rate contract, for example by paying late, going over
(APR) is the cost of credit expressed as a yearly your credit limit, or bouncing a payment check.
interest rate. Penalty rates usually are higher than your standard
or introductory rates. If you become more than 60
Annual fee A yearly fee that may be charged for
days late, the penalty APR may be applied to your
having a credit card. Some card issuers assess the
existing balance.
fee in monthly installments. Some cards do not
have an annual fee. Penalty fees Fees charged if you violate the
terms of your cardholder agreement or other
Balance The amount owed on the account,
requirements related to your account. For example,
including the charges, interest, and fees owed.
your credit card company may charge a penalty fee
Balance transfer fee A fee charged when you if you make a late payment or if you exceed your
transfer your balance from one card to another. It credit limit.
may be a flat fee or a percentage of the transfer.
Some cards charge zero percent interest on
balance transfers, but if there is a transfer fee, that When your rates can rise
means the transfer is not free. Most credit cards have interest rates that change
based on overall interest rates in the economy. This
Credit limit The maximum amount that may be
means that when interest rates rise generally, the
borrowed on a credit card. Some credit card
interest rate you pay on your credit card purchases
advertisements offer a credit limit up to a certain
also increases.
amount – but you may not qualify for the maximum.
Experts recommend keeping your use of credit to Otherwise, credit card companies cannot raise
less than 30% of your credit limit, to avoid lowering your rate for the first 12 months after you open your
your credit scores and making it more expensive to account, unless:
borrow in the future.
§ There is an introductory rate (introductory rates
“Go-to” rate Interest rate you are charged after the must last at least six months) or
introductory or promotional rate. § You are more than 60 days late paying your bill
Grace period The number of days you have to pay Your rates can go up at any time after the first year,
your bill in full before an interest charge is assessed but the credit card company must notify you about
on purchases. the change in advance.
Introductory or promotional APR Your card
may have a lower APR during an introductory or
promotional period and a higher “go-to” rate after
that period ends. Under federal law, the introductory
period must last at least six months, and the credit
card company must tell you what your rate will be
after the introductory period expires.
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About us
The Consumer Financial Protection Bureau
regulates the offering and provision of
consumer financial products and services
under the federal consumer financial laws,
and educates and empowers consumers to
make better informed financial decisions.
Learn more at consumerfinance.gov
Connect with us
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consumerfinance.gov/complaint
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1/2021
