Pictured: The Schumer Box

Shopping For A New Credit Card

You’re shopping for a new credit card and you’ve narrowed down the offers to a handful that seem right for you. This was no small task on your part as there are thousands of credit card offers available today, even scores from the same provider.

Picking the “winner” will depend on a number of things, key elements you value and expect from your card. Unfortunately, you may still be having a problem going through all of the fine print, trying to determine exactly what you’re getting and just what your responsibilities are as a card holder.

There is a way for you to determine if a particular card meets your needs without stinging you with a bunch of surprises later on. Thanks to the work of U.S. Senator Charles Schumer, every credit card must come with specific disclosure information, details known in the consumer industry as the Schumer Box.

The Schumer Box

The Schumer Box mandates the following information be disclosed with your credit card offer:

Annual Percentage Rate (APR) for purchases: The interest rate you must pay on your credit card balances. This line will tell you whether you are receiving an introductory rate and how long that rate will last. Many rates are variable and will change as the prime rate goes up or down.

Other APRs: Features the rates you will pay on cash advances and balance transfers if you choose this option.

Penalty Rates: On the same line as “Other APRs” the credit card issuer must tell you what your penalty rate is if you are late making payments and what action triggers the higher rate. In this example your interest rate suddenly skyrockets to 30.99%.

Method of Computing the Balance for Purchases: There are different ways a credit card issuer can compute balances. Average daily balance calculates your interest charges on one-cycle billing; while two-cycle average daily balance will mean you pay interest on debt you’ve already paid off. Choose the former if you want the better plan.

Annual fees: Most issuers do not charge an annual fee, but if they do that information must be included. Airline cards and some rewards cards typically charge a fee while most other cards do not.

What’s Missing?

Of course, the Schumer Box isn’t perfect as some information that consumer advocates say should be disclosed is hidden away within the fine print. These include:

Default rate applied to other creditors. If you are late with your electric bill, will your credit card issuer suddenly jack up your interest rate even if you are on time with them?

Rate hikes. If your credit card issuer has a provision where they can hike up your interest rate at any time or for any reason, then you’ll want to avoid these cards.

Ultimately, you as the consumer will make the final determination about a credit card offer and whether it is worth it to you. Do your homework and compare credit card offers to find the best card for your particular needs.

Tags: annual fee, Consumer Financing, credit card disclosure, Credit Cards, finance charges, penalty APR, rebate credit cards, rewards cards, Schumer Box

It is a given that most consumers carry at least one credit card, perhaps several when you include department stores, gas station cards, plus MasterCard, VISA, AmericanExpress, Discover and others. Consumer lending is a huge industry, one that lenders depend on to fuel their businesses.

Not all credit card offers are equal with some offering high rates and no rewards to others which will give you a low, fixed rate and shower you with special prizes. Before you choose your next card, let’s take a look at the variety of credit card options out there for your consideration.

Low Interest Rate Credit Cards — Despite the recent run up in interest rates, there are still credit cards available with low rates, even zero percent financing for balance transfers. Usually, these special rates are in place until the transfers are paid off with newer purchases charged at a higher rate.

Low Introductory Rate Credit Cards — To get you to use a new card, some credit card providers will offer you a special “teaser rate” that will run for several months, usually for as long as six months. You can make purchases at the very low rate (let’s say 1.9% for six months) and then pay 12.9% or more after that time. This can be a great way for consumers to make an expensive purchase they plan on paying off within a few months time.

Pre-paid Credit Cards — For consumers with bad credit and for students who are off to college, a pre-paid credit card allows holders to build up their credit while still having the convenience of shopping with plastic. No worrying about carrying around a wad of cash — if you lose the credit card you haven’t lost your money.

Rebate Credit Cards — Use your credit card and get paid for it! Sounds like a come on, but it is true: some credit card providers will give you cash rebates on select purchases. Spend $1000 and you could have $10 or $20 credited to your account, depending on the offer.

Award Credit Cards — Also known as rewards cards, an award card works similarly to a rebate credit card: you get to select gifts based on points you have accumulated with your purchases. Typically, one point is awarded for every dollar spent and you can redeem those points online or through a catalog sent by the credit card company. Many award credit cards will automatically give you 500 or more points with your initial purchase and some will incentivize their offers through special promotions which can double or even triple your points during a special promotional period (for example, the Christmas shopping season).

The previously mentioned credit cards choices are typically MasterCard or VISA network credit cards, but American Express and Discover have special offers which might be of interest to you too. You can manage your various rebate cards with this free download to help you get the rebates and rewards coming to you.

Photo Credit: Miguel Ugade, Mexico.

Tags: award credit cards, Credit Cards, rebate credit cards