Steps
- Many of these solicitations urge you to accept "before the offer expires." Before you accept, shop around to get the best deal. A credit card is a form of borrowing that often involves charges. Credit terms and conditions affect your overall cost. So it's wise to compare terms and fees before you agree to open a credit or charge card account.
- The following are some important terms to consider that generally must be disclosed in credit card applications or in solicitations that require no application. You also may want to ask about these terms when you're shopping for bad credit credit cards.
- Annual Percentage Rate. The APR is a measure of the cost of credit, expressed as a yearly rate. It also must be disclosed before you become obligated on the account and on your account statements. The card issuer also must disclose the "periodic rate" - the rate applied to your outstanding balance to figure the finance charge for each billing period. Some bad credit credit cards allow the issuer to change your APR when interest rates or other economic indicators - called indexes - change. Because the rate change is linked to the index's performance, these plans are called "variable rate" programs. Rate changes raise or lower the finance charge on your account. If you're considering variable rate credit cards, the issuer must also provide various information that discloses to you: that the rate may change; and how the rate is determined - which index is used and what additional amount, the "margin," is added to determine your new rate. At the latest, you also must receive information, before you become obligated on the account, about any limitations on how much and how often your rate may change.
- Free Period. Also called a "grace period," a free period lets you avoid finance charges by paying your balance in full before the due date.
Tips
- If you don't have a free period, or if you expect to pay for purchases over time, it's important to know what method the bad credit credit card issuer uses to calculate your finance charge. This can make a big difference in how much of a finance charge you'll pay - even if the APR and your buying patterns remain relatively constant.
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