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How to choose a credit card?

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moerl:
Seems to me it's about time I get a credit card, if only to start "building" my credit report. How do I go about choosing a credit card?

I'm a student still and will be for another 1.5 years or so.

Armando:
Some basic criterias :

- Low interest rate
- No annual fee
- Fraud Liability Guarantee
- And maybe pick a well known one (easier when/if you travel): VISA, Mastercard, American  Express...
- A second one can be handy if you loose the other. Just don't keep them in the same place.


You could also check the web... There might be some reviews.

 :)

moerl:
I definitely want to go with Visa. That much I know. What I don't know is how to know where to get it.. it seems these days you can find a credit card offer in a bubblegum wrapper. This stuff is everywhere, making the choice a difficult one.

Armando:
You could just go to your bank and see what they offer.

CWuestefeld:
Do you have the discipline to fully pay the balance every month? Avoiding the trap of credit card interest is perhaps the most important thing you can do to manage your finances.

Assuming that you can do this, the interest rate of the card is really irrelevant. Shop around for cards that will give you cash back. Some give a flat, say, 1% of all purchases back to you; some give a higher percentage but only over a certain ceiling, others a percentage of only certain categories of purchases (e.g., gas). If you can discipline yourself, this is a great way to earn a 1% discount on every dollar you spend.

I would avoid incentive plans that give out frequent flier miles, at least if you have a choice like I've described above. "Miles" are the highest-inflation currency in the world (other than Zimbabwe): since the airlines keep "printing" more, they have to simultaneously raise the bar of how much a given service costs in miles; if you don't spend your miles immediately, they quickly become worthless.

But again, the most important thing is that you not fall victim to credit card debt. Here's a personal experience. When my wife and I bought our house, our lawyer handled the closing and disbursal of all the money. We were buying from a couple that was getting divorced, so the lawyer had to handle dividing the funds according to their divorce agreement. Our lawyer first paid off their mortgage lender, and then paid off their credit cards. Once their credit card debt was paid, they each walked away from selling their house with about $1000 in their hands  :o. Imagine that, selling a house and only walking away with $2000 because of your credit cards.

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