Credit cards are a useful tool, but credit card companies are usually looking for ways to confuse their consumers so that they can profit off of them. Things like Annual Percent Rate (APR), rewards, cash advances, and all sorts of other fees and perks have been calculated very carefully by the issuing companies so that they can get a consistent profit. But, if you know what you are looking for, you can at least break even, if not come out ahead. This article will help explain what to keep your eyes open for and what may not have too big of an impact on you. Every credit card will have some form of fees, whether they are cash advance fees, late payment fees, interest, or an annual fee. Some credit cards have rewards, which can come in the form of statement credits, gift cards, or rewards points. Finally, many cards have offers and benefits, like travel insurance, extended warranty, and other pulses that may make sense to the consumer.
Every credit card is going to have fees. That's just a fact of life. The key is to ignore the cards that charge excessive fees without differentiating themselves in any way. For example, the annual fee for the American Express Platinum card is $550 every year. While, for most people, this is excessive, American Express offers rewards and credit towards premium lounges, which can actually make the annual fee worth it if you already spend money on the right things. However, the Indigo Mastercard has a $99 annual fee and no extra benefits, therefore it is a waste for everyone. Cash advance fees are always exorbitant. They usually come at a higher APR and start accruing interest immediately, so cash advances should always be a last resort. Therefore, you should not pay much attention to this number unless you plan on getting cash advances (which again, is a bad idea). If you are carrying a balance on your card (which has varying levels of red flags attached), the APR is rather important. A few percentage points can make a big difference. If you pay your bills every month right away, then it won’t matter as much.
Not every credit card has rewards, but any of the ones worth looking at tend to come with rewards now. If you are looking at a credit card that does not have rewards, it is not worth it, because even the Discover Secured card has some basic rewards. Most rewards cards have sign up bonuses, where if you spend a certain amount in a certain period of time, you can get a bunch of that money back. If you can meet those spent requirements, you stand to save yourself some substantial money. However, you should not force yourself to spend any extra money in order to meet those requirements. Cashback cards have simple rewards structures, but many of the more exclusive cards use rewards points to complicate things. Usually, you can look up a conversion rate, but it will vary based on what you want to redeem them for. When given points, redeeming for statement credits will often use the lowest conversion rates, but redeeming for travel will usually yield the best value. Before getting the card, decide what you are likely to redeem for and then figure out an approximate conversion rate.
Every credit card worth getting will have some sort of tertiary benefit. Some of them are occasional statement credit offers (all American Express and Chase cards have these), where if you spend x dollars at y place or in z category, you can get a certain large amount back (sometimes even up to 100%). These are handy, but should not factor too much if you get the card because regular rewards and sign up bonuses will often dwarf these amounts. There are also benefits like extended warranty, cell phone protection, and travel insurance. To get these benefits, you simply just have to use your credit card on the purchase that the benefit applies to (the product you want an extended warranty on, your phone bill, or the plane tickets for your trip). They are notable enough for you to pay attention to if you want them. Travel insurance in particular can be a great choice for someone who has to travel a lot.
