Credit Card Costs and Benefits

To choose the right credit card for you, consider your credit history and the costs and benefits associated with each card.

Annual Fee
The annual fee of a credit card may be anywhere from zero dollars to several hundred dollars per year. The better a consumer’s credit history, the more likely they are to qualify for a credit card with a low annual fee or no annual
fee.

Annual Percentage Rate (APR)
The APR is the interest rate applied to the credit card balance. If the credit card has a grace period, any balance that is not paid in full by the end of the grace period will begin to accrue interest at this rate. The better a consumer’s credit history, the more likely they are to qualify for a card with a low APR.

Penalty Fees
Late fees and over-the-limit fees can be applied to the balance when the cardholder does not make their payment on time, does not make at least the minimum payment required, or when the cardholder uses their card beyond the credit limit. These fees can be kept to a minimum with good financial management.

Rewards and Perks
Credit cards may offer cash-back, gift cards to particular stores, air miles, discounts at the gas pump, or other rewards. Reward points are based on how much you spend with your credit card. Perks may include benefits such as free roadside assistance, free car rental insurance, or a free credit score.

Consumers have many credit card choices – choose one that offers what you need at a cost you are comfortable with.