Bounce Energy Savings

I’m the target demographic for credit card companies. I’m in college, have no stable source of income, and I like to spend… a lot. Yup, credit card companies love me. This is why they send me so many letters in the mail trying to get me to sign up with them. Isn’t my debit card enough? The answer is no when I want to buy those shoes that are out of my budget. But before I go charging all sorts of items on a piece of plastic, I decided to do some research first.

First, I thought it’d be good for me to own a credit card to build up my credit score. Ever since I’ve opened a bank account, I’ve had a debit card. The only problem with a debit card is that it doesn’t do anything to your credit score. Organizations such as mobile phone companies, insurance, companies, landlords, and governments use credit scores to evaluate potential risk posed to lending money to consumers. So if I want to rent an apartment, I’ll need a good credit score to do so.

For credit card owners, some choose to carry a balance and others choose to pay their balance in full each month. For those that choose to carry a balance, pick a card with a low interest rate. A high interest rate won’t matter for those who pay off their balance each month, so those credit card users will want to pick a card with a good rewards program and a low (or no) annual fee. If you need to transfer a balance, look for a credit card with a low balance transfer rate. When signing up for these cards, be cautious because these rates increase after a certain period of time.

Other credit card features I’m concerned about are:

• Interest Rate: It would be ideal if the card you chose had a low interest rate, especially if you’re planning on carrying a balance. So like I said before, if you plan on paying off your balance, a higher interest rate won’t hurt.
• Annual Fee: The annual percentage rate is the percentage applied to balances that you carry beyond the grace period. The higher the APR, the higher your finance charge will be when you have a revolving balance.
• Grace Period: The grace period is the length of time you have to pay your balance in full without incurring a finance charge. If you plan on paying your balance in full each month, make sure you get a card with a longer grace period, so you can have more time to pay off your bill.
• Credit Limit: The credit limit is the maximum amount you can charge on your credit card without receiving a penalty. It’s better to start out with a low credit limit to become familiar with responsible credit card habits. If you need to make many charges to your card during a month, you might want a card with a higher limit. Be wary of cards with no limits because they can look maxed out on your credit report.
• Rewards: There are different types of reward programs for different cards. Some offer cash back, travel miles, or gift certificates. Rewards are usually based on the percentage of your purchases made using your credit card or when you spend a certain amount of money or by using a point system.

1. digitalYoda says:

   March 3, 2010 at 1:53 pm

   MyRatePlan.com has a pretty cool credit card configurator that makes it easier for you to find the right one for you. It’s well done.
   http://myrateplan.com/creditcards/consumer/