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How to Evaluate Credit Card Offers

Lenders mailed more than six billion (yes, that's a B) credit card solicitations to American consumers in 2005. A 0% interest credit card might be tempting, but you should know the rules if you're going to play the game.


0% offers--Read the fine print on disclosures. Read the offer carefully to find out what the 0% applies to. Is it only for balance transfers? If it also covers purchases, find out how many purchases you have to make in what time period to continue receiving the rate.


Preapproval--Preapproval doesn't guarantee you a card. You still have to apply and, depending on the results of your credit check, you may or may not qualify for the card and terms offered in the solicitation.


APR (annual percentage rate)--This is the interest rate charged if you carry a balance. If you usually carry a balance, shop for a card with a low APR. If you pay your bill off in full each month, the APR is less important than other costs or features, such as the annual fee. Check to see if the APR is fixed or variable, and if different interest rates apply to different events--such as cash advances from ATMs.


Grace period--This also may be called a "free period," and lets you avoid finance charges by paying your balance in full before the due date. If a grace period is offered, the issuer must mail your bill at least 14 days before the due date to give you time to pay.


Balance computation methods--If the card doesn't offer a grace period, or you expect to pay for purchases over time, know what method the issuer uses to calculate your finance charge. The most common method is the "average daily balance" approach, where finance charges are calculated on the daily average for the billing period.


Fees--You may be charged a fee if you use the card to get a cash advance, make a late payment, or exceed your credit limit. Some charge a monthly fee whether or not you use the card


The credit union advantage on credit cards was 1.51 percentage points over the past year.

Talk to a credit union loan officer for your best deal in a credit card.


Copyright 2007 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.