Before choosing a card, think about how you plan to use it. Picking the right card will save you money and give you greater flexibility.

• Expect to pay your bill in full every month? Then you’ll probably want a card with no annual fee and with a longer grace period.
• If you expected to carry over a balance from one month to another, look for a card with a lower annual percentage rate (APR).
• Some cards apply a higher APR for cash advances than for purchases; avoid these if you expect to regularly use your card to get cash advances.
• Others reward you for using them with special incentives, such as frequent flyer miles. They can be cost-effective, but only if you understand you are likely to pay higher fees and APRs. In other words, use with care.

If you carry over a balance from month to month, take out a cash advance or transfer a balance from another card, you will be charged and annual percentage rate on that money. The APR states the interest rate as a yearly rate.

There are several types of APRs:

• Multiple APRs A single credit card may have several APRs: One for purchases, one for cash advances, and another for balance transfers. Cash-advance and balance transfer APRs are often higher than the APR for purchases.
• Tiered APRs Different rates are applied to different levels of the outstanding balance. Example: 16% on balances of $1–$500 and 17% on balances above $500.
• Penalty APR The APR is likely to increase if you are late in making payments.
• Introductory APR A higher rate will apply once the introductory rate expires.
• Delayed APR A different rate will apply in the future. For example, a card may advertise "no interest until next March." Look for the APR in effect after March.

If you carry over a part of your balance from month to month, even a small difference in the APR can make a big difference in the amount you pay over a year.

Fixed vs. variable APR:

Some credit cards are fixed rate - the APR doesn’t change, or rarely does. The APR on a fixed rate card can change over time – but the issuing company must tell you ahead of time.

With variable rate cards, the APR is tied to another interest rate, such as the prime rate of the Treasury bill rate, and may changes from time to time. The credit card application and the credit card agreement must disclose how often your card’s APR may change.

When you use your credit card to make a purchase, you have a certain number of days to pay in full before incurring a finance charge.

The grace period usually applies only to new purchases. Most credit cards do not give a grace period for cash advances and balance transfers but start charging interest immediately.

If you carry over part of your balance from the month before, you may not have a grace period for new purchases. Instead, you may be charged interest as soon as you make a purchase (in addition to being charged interest on the earlier balance you have not paid off). The credit card application will disclose the "method of computing the balance for purchases;" check it to see if new purchases are included or excluded.

The finance charge is the amount you are charged to use credit. It depends largely on your outstanding balance and the APR.

Several methods are used to calculate the outstanding balance. The method can make a big difference in the finance charge you pay. Your outstanding balance may be calculated:

• over one or two billing cycles,
• using the adjusted balance, the average daily balance, or the previous balance, and
• either including or excluding new purchases in the balance.

Normally (and this depends on the outstanding balance and the timing of your purchases and payments), you'll have a lower finance charge with one-cycle billing and either:

• the average daily balance method, excluding new purchases,
• the adjusted balance method, or
• the previous balance method.

Some credit cards have a minimum finance charge, which you be charged even if it's higher than the calculated amount of your finance charge is less. Say your finance charge is calculated to be 35 cents but if the company's minimum finance charge is $1.00, you'll pay $1.00. A minimum finance charge usually applies only when you carry over a balance from one billing cycle to the next.

Most credit cards charge these fees:

• Annual fee: The amount you're charged for having the card. Some companies charge it annually; others include on your monthly statement.
• Cash advance fee: What you're charged when you use the card for a cash advance; it may be a flat fee (for example, $3.00) or a percentage of the cash advance (for example, 3%)
• Balance-transfer fee: Charged when you transfer a balance from another credit card
• Late-payment fee: Charged if your payment is received after the due date
• Over-the-credit-limit fee: Charged if you go over your credit limit
• Credit-limit-increase fee: Charged if you ask for an increase in your credit limit
• Set-up fee: Charged when you open your new credit card account
• Return-item fee: Charged if you pay your bill by check and the check bounces
• Other fees: Some credit card companies charge a fee if you pay by telephone. Some charge to review your account, to provide other customer services or to cover the costs of reporting to credit bureaus.

These fees and any other will be disclosed on your credit card agreement.

Some credit card companies let you borrow cash on credit. Most treat cash advances and your purchases differently. If you plan to use your card for cash advances, look for information about:

• Access: With most credit cards you can get your cash advance using an ATM. Some companies may send you "checks" you write to get the cash advance.
• APR: The APR for cash advances may be higher than the APR for purchases.
• Fees: In addition to the interest you will pay on the amount advanced, you may also be charged a fee for advances.
• Limits: Some cards limit cash advances to a dollar amount ($200, say); others calculate the limit as a portion of your credit limit (for example, 75% of your available credit limit).

Credit card companies typically apply your payments to purchases first and then to cash advances. Read your credit card agreement to learn how your payments will be credited.

The credit limit is the maximum total amount you may charge on your credit card, including purchases, cash advances, balance transfers, fees and finance changes. Go over this limit, and you most likely will have to pay an "over-the-credit-limit fee."

Most credit card companies offer several types:

• Secured cards: If you're establishing credit for the first time or have had credit problems in the past, you may be offered a secured card, which requires a security deposit. The larger the security deposit, the higher the credit limit.
• Regular cards: They do not require a security deposit and offere just a few features. Most have higher credit limits than secured cards but lower limits than premium cards.
• Premium cards: Usually known as gold, platinum or titanium cards, they offer higher credit limits and usually have extra features that may include product warranties, travel insurance, or emergency services.

Many companies offer incentives and special features to use the card:

• Rebates (money back) on the purchases you make
• Frequent-flier miles
• Phone-call minutes
• Additional warranty coverage on the items you buy
• Car rental insurance
• Travel accident insurance or travel-related discounts
• Credit card registration, to help if your wallet or purse is lost or stolen and you need to report that your credit cards are missing

For a price, credit cards may also offer:

• Insurance to cover the payments on your credit card balance if you become unemployed or disabled, or die. Premiums are usually due monthly, so you can easily cancel if you no longer want to pay the premiums or decide you no longer need the insurance.
• insurance to cover the first $50 of charges if your card is lost or stolen (under federal law, you are not responsible for charges over $50).

Carefully consider these features before committing yourself; don't pay for something you don’t want or don't need.

The Federal Reserve System maintains a comprehensive collection of information about personal finances, including excellent information about credit cards.

This site, creditcardsonline.com, offers the most current available information about credit cards, but it is limited. When you link to any credit card application from our site, be sure to ready the details in the application before making a decision.

Under federal law, it must tell you:

• annual percentage rate (APR) for purchases
• other APRs:
cash-advance APR
balance-Transfer APR
• penalty rate
• variable-rate information
• grace period for repayment of balances for purchases
• method of computing the balance for purchases
• average daily balance (excluding new purchases)
• annual fees
• minimum finance charge
• transaction fee for cash advances:
balance-transfer fee:
late-payment fee:
over-the-credit-limit fee

If your credit card is lost or stolen, you must pay only the first $50 of the charges made by another person.

If its card is lost or stolen, immediately call the toll-free number on your monthly statement. The company will cancel the card and send you a new one.

To make reporting easier, keep a list of your account numbers and the companies’ phone numbers in a safe place. Take a list of phone numbers - but not account numbers--with you when you travel, in case a card is lost or stolen.

The federal Fair Credit Billing Act covers billing errors. Examples are:

• charges for items you didn't buy
• a bill for an amount different from the amount you charged
• a charge for something you didn't accept when it was delivered
• a charge for something that wasn't delivered according to the agreement
• math errors
• payments not credited to your account
• a charge by someone lacking permission to use your card

If there’s an error on your bill:

1. Write to the credit card company within 60 days after the statement date on the bill with the error. Use the address for "billing inquiries" on the bill. Tell them:
your name and account number
that you believe the bill contains an error
why you believe it's wrong
the date and amount of the disputed amount
2. Pay all the other parts of the bill. You do not have to pay the "disputed amount" or any minimum payments or finance charges that apply to it.

If there is an error, Your account must be corrected and you will not have to pay finance charges on the disputed amount.

If it finds no error, the credit card company must send you an explanation and a statement of the amount you owe. The amount will include any finance charges or other charges that accumulated while you were questioning the bill.

You may refuse to pay for any damaged or poor-quality goods or services you buy with a credit card, but you must first to solve the problem with the merchant.

The sale must have been for more than $50 and must have been made in your home state or within 100 miles of your home. Notify the credit card company in writing and explain why you are withholding your payment.

You may withhold the payment while the credit card company investigates your claim. If you the charges before the dispute is resolved, you will lose your right to make a claim.