Best, Worst, Good, and Bad Credit Card Terms and Conditions
You know about interest rates. You know that a lower interest rate credit card is better than a high interest rate credit card. But what about the rest of the terms? Do you know what separates a good credit from a bad credit card? Do you know what to look for to find the best credit cards?
Information About Credit Card Terms
The best place to find information about a credit card's terms and conditions before you apply is on the back of the application. The law requires an easy to read chart to be included with any application. Most credit card companies print it on the back in a demure gray color in stark contrast to the bold and colorful front.
On the chart you will find the interest rate, of course, but other important terms as well.
Some of the most important information is actually in the footnotes at the bottom of the chart which spell out what the credit card company really means when it comes to the numbers printed here.
Good Credit Card Terms
- Interest Rate -- Don't make the mistke of just looking at the first percent sign you see. There may be more than one interest rate. Sometimes there is a different (higher) rate for cash advances, balance transfer, and so on.
- Variable Interest Rate -- If it is a variable interest rate, you need to know where the number comes from. Chances are the information you are looking for in the footnotes. Look for something like, Prime Rate + 2%. That means your interest rate will be the PRIME rate plus whatever number you see. If rates are really low, do your own math to see what the interest rate would be with more "normal" PRIME rates like 5%, 7%, and 8%.
- Grace Period -- This is how long you get to pay off the card in full before you start paying interest. The closer to 30 days, the better. Anything less than 21 days is shameful.
- Annual Fee -- Any annual fee of any kind is unacceptable. Unless you have bad credit, there are way too many good credit cards out there without annual fees for you to pay one. This includes all airline miles credit cards, rewards credit cards, and so on. If your card charges an annual fee, pay it off and cancel it as soon as you have recieved a replacement no annual fee credit card.