Credit Card Features

Choosing the Right Card for You

There's much more to choosing a credit card than learning which ones offer free giveaways for signing up. Shopping around for a credit card can save you money on interest and fees, which can vary among credit card issuers. Most issuers offer several kinds of cards, including:

• Secured cards, which require a security deposit. The larger the security deposit, the higher the credit limit. Secured cards are usually offered to people who have limited credit histories. Those include people who are just starting out or who have had trouble with credit in the past.
• Standard cards, which do not require a security deposit and have just a few features. Most standard cards have higher credit limits than secured cards but lower credit limits than premium cards.
• Premium cards (gold, platinum, titanium), which offer higher credit limits and usually have extra features, including product warranties, travel insurance or emergency services.

You'll want to find one with features that match your needs. Before choosing a credit card, ask yourself these questions:

• Do you expect to pay your account in full each month? If so, the annual fee and other charges may be more important than the annual percentage rate (APR).
• Will you be using the cash advance feature? In this case, the APR and fees applicable to cash advances may be more important.
• Is the credit limit high enough?
• Is the card accepted at the majority of the places you plan to use it?
• What are the plan's services and features?

Features and Benefits of Some Credit Cards

Credit Cards offer a wide range of features and benefits. It is important to read and understand all of the criteria associated with the features of your card. Below is a list of some of the most common:

• Rebates (money back) on the purchases you make
• Rewards programs that can be redeemed for airline tickets, gift cards or other purchases
• Warranty coverage for the items you purchase
• Car rental insurance
• Travel accident insurance or travel-related discounts

Before you sign up to pay for any of these features, think carefully about whether it will be useful for you — don't pay for something you don't need. Shopping around for a credit card can save you money on interest and fees.

Cash Advances

Some credit cards let you borrow cash in addition to making purchases on credit. Most credit card companies treat cash advances and your purchases differently. If you plan to use your card for cash advances, look for information about:

• Access. Most credit cards let you use an ATM to get a cash advance. Or the credit card issuer may send you checks that you can write to get the cash advance.
• APR. The APR for cash advances may be higher than the APR for purchases.
• Fees. The credit card company may charge a fee in addition to the interest you will pay on the amount advanced.
• Limits. Some credit cards limit cash advances to a dollar amount (for example, $200 per cash advance or $500 per week) or a portion of your credit limit (for example, 75 percent of your available credit limit).
• How payments are credited. Many credit card issuers apply your payments to balances with lower APRs before balances with higher APRs. If cash advances have a higher APR than purchases, your payments may be applied to your purchases before your cash advances. Read your credit card agreement to learn how your payments will be credited.

Insurance Options

Many cards offer insurance to cover the payments on your credit card balance if you become unemployed, disabled or in the case of death.

• Premiums are usually due monthly, making it easy to cancel if the payments are higher than you want to pay or you decide you don't need the insurance any longer.
• Most issuers don't hold customers responsible for fraudulent charges.
• Insurance programs vary per card so make sure to read and understand the coverage options that are associated with your card.

Fraud Protection

Here are some tips to help protect yourself from credit card fraud.

Do:

• Sign your cards as soon as they arrive.
• Carry your cards separately from your wallet, in a zippered compartment, a business card holder or another small pouch.
• Keep a record of your account numbers, their expiration dates and the phone number and address of each company in a secure place.
• Keep an eye on your card during the transaction, and get it back as quickly as possible.
• Void incorrect receipts.
• Destroy carbons.
• Save receipts to compare with billing statements.
• Open bills promptly and reconcile accounts monthly, just as you would your checking account.
• Report any questionable charges promptly and in writing to the card issuer.
• Notify card issuers in advance of a change in address.

Don't:

• Lend your card(s) to anyone.
• Leave cards or receipts lying around.
• Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
• Write your account number on a postcard or the outside of an envelope.
• Give out your account number over the phone unless you're making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Reporting Losses and Fraud:

If you lose your credit cards or if you realize they've been lost or stolen, immediately call the issuers. Many issuers have toll-free numbers and 24-hour service to deal with such emergencies. By law, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question.

For More Information:

The Federal Trade Commission (FTC) works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Information in this article was derived from the Federal Reserve Board and the Federal Trade Commission Web sites.