Beware Credit Card ‘Teaser’ Offers

You’ve seen the advertisements – credit cards with zero percent APR, long payment grace periods, access to amenities like NFL tickets or the latest electronic gadgets. They’re all designed to attract new cardholders, of course, and many of the incentives can be of real benefit to consumers. However, these “teaser” offers are oftentimes short-lived, so it’s important to understand what your cardholder agreement will look like over the long-term. Ask yourself the following two questions before swiping a new credit card.

What is the eventual APR?

While it’s a credit card best practice to pay your bill down to zero each month, many of us carry balances. If you think you’ll find it difficult to maintain a zero-balance over time, pause before you jump on that zero percent APR offer. Chances are it will expire in 6-12 months, and then you might be subject to an APR as high as 25.99 percent. You’ll also want to determine whether a zero percent offer applies to balance transfers only, or to new purchases too.

Will you feel the weight of an Annual Fee?

Even with a stellar APR and amenities you enjoy, consider whether you’ll feel burdened by a hefty annual fee on your new credit card. If the annual charge outweighs the monthly benefits, you may want to look elsewhere. Many cards today come with fantastic benefits and no annual fee.

It pays – quite literally – to be an educated consumer. Ask questions and read the fine print before entering into any financial relationship that could impact your credit score, including with credit card companies.

Image via Flickr/seanmacentee