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Choosing A Card If You Carry A Balance

Yesterday, we wrote about how to choose a credit card if you never carry a balance.

Today, we’ll go over the rules of the road for choosing a card if you don’t always pay the bill in full each month.

This advice comes with the standard caveat — the best way to use credit cards is to avoid interest by never carrying a balance.

But if you do, here are five things you should consider before choosing your next card:

Get the card with the lowest APR. If you carry a balance, getting the lowest APRs and fees is critical. Generally speaking, the cards with the lowest rates charge annual fees, but not necessarily.

There are still lots of free low-rate cards, such as those issued by Pentagon Federal Credit Union. Many credit unions also tend to offer low APRs. Start by looking at what credit unions near you offer.

But you’ll usually need excellent credit to qualify for the lowest-rate cards.

Don’t even think about rewards. If you carry a balance, the rewards cards offer are meaningless.

Use two cards. Even if you almost always pay off your bill each month, an emergency can cause you to carry a balance. Maybe your furnace died, or you had a big car repair bill.

For those emergencies, get two cards: a card with a low APR to carry the balance, the other one for your regular spending.

Never use the same card to carry a balance and earn rewards. The interest you owe will outweigh any rewards you earn. Plus, all the new purchases will make it that much harder to pay off the balance, which should be your goal.

Use balance transfers carefully. Many cards offer 0% introductory and balance transfer deals that can save you a lot of money. For example, the Citi Thank You Preferred card’s 0% period lasts 18 months. It also has a low 3% balance transfer fee; other cards charge you as much as 5%.

These offers are not too good to be true. But you can get burned if you’re not careful.

If you’re going to take advantage of one of these deals, make sure you know when the rate expires. Write that date on your calendar, and pay off the balance before then.

Once the 0% period ends, the APR reverts to the standard rate, which could be 15% or more.

If you have poor or weak credit, don’t be a serial balance transferrer. Opening lots of new accounts could hurt your credit score, making it more difficult and expensive for you to get new offers.

Ready? Start your hunt for a new card in our database of credit card offers, where you’ll find top low-interest cards.

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