Some credit cards allow cardholders to accumulate things such as cash back rebates, product discounts, and frequent flyer miles as the card is used. As with any other type of credit card, potential borrowers need to carefully consider the card's annual percentage rate (APR, or interest rate), fees, term, and their projected use of the card. Generally speaking, if cardholders don't use the card much or do not pay the balance in full each month, they probably won’t benefit much from this type of credit card because either their spending is not high enough to generate significant benefits or the fees paid by not paying the balance will negate any benefit. Some credit cards offer other enhancements. These include purchase protection plans, collision damage waivers for car rentals, travel discounts, and extended warranties. Benefits such as these often come with limits and should not be the primary reason why a credit card is selected. Interest rates and fees are the most important factors. Credit card benefit policies are also subject to change. While these benefits are often marketed with a great deal of fanfare to attract customers, they are often dropped very quietly. When evaluating a credit card offer, it is important to read “the fine print.” This includes mandatory disclosure information (Schumer Box) and the footnotes that accompany it. Key features to look for are the post-introductory APR, expiration dates for "teaser rate" offers, the type and amount of fees, the way the outstanding balance is calculated, and how the benefits can be claimed. We would like your feedback on this Personal Finance Frequently Asked Question.

Browse related Faqs by tag: personal finance, credit, creditcards