Choosing a Credit Card This FITS

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Finding the best credit card for you depends on what you need both now AND in the future. Our best advice: understanding the key components of a credit card. These components include Annual Percentage Rate (APR), Grace Period, Fees and Rewards. Let’s take a closer look at each component.

Annual Percentage Rate (APR)

An Annual Percentage Rate, also referred to as an APR, is the percentage applied to the balance on your card. It describes the interest rate for a whole year (annualized), rather than just a monthly fee or rate. It’s a finance charge. The higher the APR, the more interest you’ll pay on your card balance each month. Some credit cards have a different APR for purchases, balance transfers and cash advances, so take a close look at each of these areas. Also, be sure you understand what your APR will be after an introductory rate offer is over (e.g., 0% APR for 12 months). If you pay your card balance each month, the APR may not affect your decision all that much, but you should still fully understand how the APR works just in case.

Grace Period

The grace period is the amount of time you have to pay your balance in full before a finance charge is applied. In most instances, it will range from 20 to 28 days from the billing date. Longer grace periods are better, because they allow you more time to avoid interest charges. Additionally, you’ll want to know if the grace period changes on a new purchase if you have an existing balance on your card.

Fees

The most common fees you’ll find on credit cards are annual fees, late payment fees, over-the-limit fees and cash advance fees. Be sure you have a clear understanding of not only how much the fees are, but when they’ll be charged. Most of the fees on any given card can be avoided in some way, so make note of how to do so in your research.

Rewards

There are many different credit card reward options in the market today, including airline miles, cash back bonuses, purchasing points for merchandise and more. The way you earn rewards may be different for each credit card. For example, with BancorpSouth Credit Card rewards you earn a point for every dollar you spend on your BancorpSouth Credit Card. Then you can redeem your points for gift cards, air travel, car rentals and more. Some may base their use on the relationship you have with the lender, while others may require higher annual fees for their use. Take a close look at how rewards are granted – whether immediately, monthly or annually. Be sure you find a card where you can use the rewards easily when you need them most.

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