California Educator

February 2014

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CTA &You Benefit Which credit card is right for you? Or your kids? H OW D O YO U F I N D the right credit card for you given the many choices available today? What advice can you give your kids who are getting their first credit card? Here is a list of some things to consider for a card that fits both your lifestyle and your finances. FIRST, WHAT TYPES OF CREDIT CARDS ARE AVAILABLE? Get started by learning about the different types of credit cards: • S tandard credit cards typically have lower credit limits and fewer benefits than premium cards and are designed to provide basic credit card services. • P remium credit cards, such as platinum cards, offer higher credit limits and usually have extra features, including product warranties, purchase protection, travel insurance and emergency services. • R ewards credit cards offer rewards based on the amount of your purchases. Rewards can include cash, travel and gift cards. Some offer a combination of these. Standard, premium and even private label cards (department store cards, for example) may also offer rewards. • P rivate label credit cards can offer special deals but can only be used at one or a few stores. • A ffinity credit cards show your support for a group or cause such as a charity, a college or a sports team. In some cases, contributions are made to the group when you use the card. • S ecured credit cards often require a security deposit that becomes the credit limit for the account. They can be used just like any other credit card, and they can help build your credit because your payment history is reported to the major credit bureaus. NEXT, HOW ABOUT CREDIT CARD RATES, FEES AND FEATURES? Rates and fees are an important part of the decision process. The law requires that this information be clearly displayed in a comparison box or chart in the Credit Card Agreement, on the credit card site or in the mail promotion. And you'll want to know about any special features that might help with your decision. 52 Educator 02 Feb 2014 v2.1 int.indd 52 Information you need to know about credit card rates, fees and features: • A nnual fees are included with some cards, so make sure you understand this when you compare benefits. • T he annual percentage rate (APR) may be different for purchases and other types of transactions. It is important to note the APR for the types of transactions you'll be making with your card. The APR for purchases determines the cost associated with not paying your balance in full each month. If you make cash transactions, such as balance transfers or ATM withdrawals, there are costs associated with these transactions whether or not you pay your balance in full each month. • A dditional fees and penalties include transaction fees and late fees. Being aware of the service costs for certain types of transactions, as well as what happens if you pay late or miss a payment, will help you avoid these fees. • R ewards, discounts, warranties and rebates can be deciding factors in choosing a card. Make sure you understand any limitations associated with the stores or products included in these offers, or restrictions related to how rewards can be redeemed. • S ecurity features like fraud protection are available on some cards. Read the details of your card agreement to learn the rules and determine if you are liable for fraudulent purchases. FE B RUARY 20 14 1/27/14 3:52 PM

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