October 2007
How to pick the right card
If you pay off your card each month, look for one with no annual fee. The interest rate will be of less concern.
If you often run a balance, make getting a low interest rate your top priority. The first three issuers in our Ratings
If you want to get something back, opt for a reward card, but only if you don't expect to carry a balance. Reward cards often have annual fees and tend to charge interest rates 1 to 2 percentage points higher than other cards, which can quickly negate any rewards. Before you sign up, make sure the card matches your purchasing patterns. For example, some cards don't pay points for purchases at certain retailers, such as warehouse clubs. The most flexible reward cards let you choose your prize: cash back, air miles, or gift certificates. You can find a list at www.bankrate.com.
If you want to switch your balance, search for a new card with a "zero percent" introductory rate on balance transfers. But switch only if you can pay off the balance during the intro period. Zero percent rates used to last for a year or more, but now they disappear in as little as six months. At that point you'll typically be bumped up to current rates, which recently averaged about 15 percent. Also ask about any balance-transfer fee; many issuers will charge you 3 percent of your balance. That fee is usually capped at $50 or $75, but recently many issuers have removed the limit.
If you want the fewest hassles, head to a credit union. USAA or Navy Federal would be a good choice if you have a military connection. In general, credit unions not only charge lower rates but also provide superior customer support. And they might offer the same reward programs as other cards. Some credit unions allow members' relatives to join, so consult your family to see who belongs to one. Ask your benefits department if there's one for people in your line of work. Or search by your ZIP code on the Web site of the Credit Union National Association, which lists the 8,700 groups in the U.S. (www.creditunion.coop).
If you often run a balance, make getting a low interest rate your top priority. The first three issuers in our Ratings
(available to subscribers)
would all qualify.If you want to get something back, opt for a reward card, but only if you don't expect to carry a balance. Reward cards often have annual fees and tend to charge interest rates 1 to 2 percentage points higher than other cards, which can quickly negate any rewards. Before you sign up, make sure the card matches your purchasing patterns. For example, some cards don't pay points for purchases at certain retailers, such as warehouse clubs. The most flexible reward cards let you choose your prize: cash back, air miles, or gift certificates. You can find a list at www.bankrate.com.
If you want to switch your balance, search for a new card with a "zero percent" introductory rate on balance transfers. But switch only if you can pay off the balance during the intro period. Zero percent rates used to last for a year or more, but now they disappear in as little as six months. At that point you'll typically be bumped up to current rates, which recently averaged about 15 percent. Also ask about any balance-transfer fee; many issuers will charge you 3 percent of your balance. That fee is usually capped at $50 or $75, but recently many issuers have removed the limit.
If you want the fewest hassles, head to a credit union. USAA or Navy Federal would be a good choice if you have a military connection. In general, credit unions not only charge lower rates but also provide superior customer support. And they might offer the same reward programs as other cards. Some credit unions allow members' relatives to join, so consult your family to see who belongs to one. Ask your benefits department if there's one for people in your line of work. Or search by your ZIP code on the Web site of the Credit Union National Association, which lists the 8,700 groups in the U.S. (www.creditunion.coop).
