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True or False: Credit cards outnumber people in the United States. Are you surprised that it's true?

Today there's a card for every cause and more than one for every person. With so many cards available, how can you choose the right one for you? If you review each card's fine print and identify your credit card habits, you can find a card with the features and terms that best match your needs.

What kinds of cards are there?
Although the term is used broadly, there are three kinds of credit cards:
  • Travel and entertainment cards (American Express, Diners Club) don�t have preset spending limits; you must pay them in full each month.
  • Company or retail store cards (Sears, Shell) are those issued and accepted by only that company.
  • Bank cards (Visa, MasterCard, or Discover) let you "revolve" credit by paying a portion of your balance each month.

What is the interest rate?
All card offers must state clearly the annual percentage rate (APR) of interest. Bank cards charge an average APR four and one-half percentage points higher than credit union-issued cards.
      You may see advertised rates as low as 5.9%. These are called teaser rates, offered as an enticement for you to sign up for the card. Most teaser rates last only three months to six months before the card's higher interest rate kicks in.
      "The issuer hopes you forget about how long the introductory offer ran for," says Kevin Miiller, vice president of marketing and member relations for Desert Schools Federal Credit Union in Phoenix. "If you're interested in chasing teaser rates, you have to pay attention to the terms." Another flaw in teaser rate offers: Sometimes rolling over a balance from another card actually is a cash advance, subject to a much higher rate than the short-lived introductory rate.
      Teaser rates
      usually last
      only three to
      six months.

What fees will you pay?
"Issuers are much more aggressive with fees than they used to be," says Gerri Detweiler, credit and debt consultant and author of "The Ultimate Credit Handbook" (ISBN 0-452-26946-6). Besides the familiar annual fee, many charge fees for cash advances, late payments, spending over your limit--and even for not carrying a balance!
      Issuers also are shortening or eliminating grace periods, the length of time you have before you're charged interest on new purchases. If your payment arrives late, you'll pay not only interest but possibly a late fee as well.
      Again, every credit card solicitation must list its interest rates and fees. Look at those first to see if the terms are acceptable to you.

What kind of credit consumer are you?
Do you carry a balance? Pay on time? Switch cards often? Examine how you use your cards and how much you pay for the privilege. "Be honest with yourself," Detweiler says. "People underestimate how frequently or how much they carry on a balance. Go back to your statements to see what balances you carry and how much you paid in interest."
      If you frequently carry a balance, search for the lowest interest rate available. "A low interest rate will usually outweigh an annual fee," says Detweiler. You can find rate comparisons at the Bank Rate Monitor, Inc.'s Web site and at RAM Research's Web site.
      Also note how the issuer calculates finance charges. According to the National Institute for Consumer Education at Eastern Michigan University in Ypsilanti, the adjusted balance method is the least expensive; the previous balance method is the most expensive.
      If you pay off your balance every month, choose a card with an interest-free grace period and no annual fee, Detweiler says. Or you may opt to pay an annual fee in exchange for a rebate card (which earns frequent flier miles, cash back, and so on) or a gold card (which may offer rental car insurance and other perks). Make sure the payoff is worth the price of the annual fee. "Decide which rebate card is best and concentrate on one," says Andrew Feinberg, author of "Downsize Your Debt: How To Take Control of Your Personal Finances" (ISBN 0-14-013428-X).
      Be honest
      with yourself about
      how you use your
      credit card.


Credit union-issued
cards offer
better terms.
How can you get a better deal?
With competition in the credit card industry at an all-time high, you have some negotiating power. Start with your own issuer. If you hold a credit union-issued card, you may qualify for a lower interest rate on a car loan or better terms on an investment. "You can benefit in other ways from having a credit card," Miiller says.
      If you hold the usual Visa or MasterCard, you may be able to command a better interest rate, eliminate the annual fee, or increase your credit limit. If the issuer can't offer better terms, look at what other card companies can offer. Even consumers with less than perfect credit are finding more offers available to help them rebuild their credit, typically using what�s called a secured credit card. In this arrangement, you pledge a savings balance against the limit for your credit card.
      The bottom line: Shop around. The fine print you settle on should be the best print for your needs. "A lot of people don't pay attention to their credit cards," Detweiler says. "Typically, a person could save $100 to $200 a year or more if they just took the time to find the best cards for them."

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