Units
*Intro*	1	2	3	4	5	Wrap-up
UNIT 4: Choosing the right credit card

So now that you have a little more info on credit cards, we can talk about choosing a credit card. Now, for many people, even the concept of choosing a credit card is a new concept. Most people let the credit cards choose them. They get an offer from a credit card company or walk past a credit card promotion and decide on the spur of the moment whether to apply or not for the card. The free t-shirt or other promo item that is being offered seals the deal on many occasions and the terms and conditions are, as often as not, ignored. This is how many people end up with a whole deck of credit cards that they have no idea of the terms and conditions on. Then, once they have them, well, the temptation is always there to use them.

I had friends in college who made a competition out of how many credit cards they could get. They collected the cards and the t-shirts and some of them made it into double digits on both. For them it was a game. They just signed up and forgot about most of the cards, which, provided the cards didn’t have an annual fee, wasn’t really a problem at first. Now running up debt on a single card can be a problem. However, running it up on multiple cards is even worse. And two of my friends did just that. Once things got out of hand, just trying to manage sending out the payment checks at the right times for the different cards was a nightmare. Then they found that late payments led to more fees and the fees piled on the debts. Both of them managed to get out of trouble by the end of their junior year, but that meant working long hours in the evening, weekends and holidays and it really spoiled college for them.

By now, of course, you might have signed up for a card. If you have, then think about what you know about those credit cards. Do you know what the APR is? Do you know what the rate of interest is on cash advances? Do you know how long the grace period on purchases is? Is there an annual membership fee? What is your credit limit? Did you even consider these things when you were applying for the card? If you have a card and you don’t know these things, that’s a little scary. And if you don’t have one yet, these are the things that you need to look at before you decide which one to get.

Of course, you might not even need a credit card. You are probably thinking, what is this guy talking about, how can you get by without a credit card? You are thinking about buying things online, about the inconvenience of carrying cash, about how checks are not accepted everywhere, generally about how great a credit card is. Well, you are correct, cash and checks can be inconvenient and it is great to be able to shop online. But that doesn’t mean that credit cards are your only alternative. I mentioned debit cards before. Debit cards offer nearly all of the benefits of credit cards. Most banks give out debit cards as their standard bankcards. With a Visa or MasterCard debit card, you can access ATMs (or regular tellers) to get cash that immediately draws money out of your bank account. The big plus is that having the VISA or MasterCard symbol on a debit card makes it acceptable in all of the places that a credit card is accepted, including online. So, if you are only looking for a convenient solution for handling cash, rather than looking for credit, a debit card is probably the way to go. Lots of my friends at college just used debit cards for their purchases; others used a mixture, with most of the purchases going on the debit card and only occasional, big expenses going on the credit card. I must admit in my freshman year, I was so hooked on the idea of having a credit card that I used mine all the time -- not to excess, I nearly always paid off my balance. But I could have made most of the purchases I put on my credit card with my debit card.

I guess what I am saying is that having a credit card is not a bad thing, but don’t just take the first thing that comes along. Check them out a little and choose one that fits you. Then, once you have found a good one, stick to that one. When you are making purchases, think about the alternative ways of paying for things, especially debit cards, before you automatically pick the credit card out of your wallet.

Click here for an information sheet on credit and credit management

Worksheet 4

Please complete the following worksheet. Once completed click on the submit button at the bottom of the worksheet.

Find information on three credit cards. For each of the three cards answer the questions below:

		A	B	C
1.	Card name
2.	Issuing financial institution
3.	Introductory rate for transferring balances from other credit cards
4.	Length of introductory period
5.	APR for purchases (Standard Rate)
6.	APR for cash advances
7.	Will the APR for purchases increase if the credit limit is exceeded or payment is past due?	Yes No	Yes No	Yes No
8.	Annual Fee
9.	Late payment fee
10.	Cash advance fee
11.	Over-the-credit limit fee
12.	Is there a rewards program?	Yes No	Yes No	Yes No
13.	Online account management?	Yes No	Yes No	Yes No
14.	Grace period
15.	Method of computing the balance for purchases

Please enter the following details before submitting this form. This information will ONLY be used to allow us to report to your URI 101 instructor that you have completed this worksheet.
Last Name		First Name
Section Number		Instructor

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