Choosing a Credit Card

Shopping for a credit card may sound like an oxymoron. Who needs to shop when your mailbox is stuffed with credit card offers almost every day? But comparison shopping for a credit card can save you some hassle, not to mention money. If you pay your entire bill every month, for example, you want look for a card with no annual fee and a longer grace period to pay the bill before the finance charge kicks in.

On the other hand, if you typically carry a balance, interest rates are crucial. Picking the card with the lowest rate may seem easy, but you need to do your homework. A single credit card can carry several rates, like different rates for purchases versus cash advances, or tiered rates, where the rates change at different levels of the outstanding balance. For example, the rate on the first $1,000 of the balance may be a percentage point or more lower than the rate on balances over $1,000. And don’t be taken in by fixed-rate offers. The card issuer usually has the right to increase a “fixed” rate with as little as 15 days notice.

The perks that the card can earn you should also suit your life style. If you’re a traveler, for example, you should look for a card that gives you frequent-flyer miles or free lodging. If travel isn’t your thing, you can choose a card that gives you cash back. Whatever you’re looking for, one of the best places to make a quick credit-card comparison is at Bankrate.com (www.bankrate.com). For a more comprehensive rundown, take a look at the Federal Reserve Board’s semi-annual survey of credit card plans (http://www.federalreserve.gov/Pubs/shop/survey.htm).