As you start exploring what it is that you need to do upon moving to the United States, you have probably discovered that getting a credit card is at the top of the list. To better your credit score (and make it easier to get a job or any sort of loan), a credit card is a quick and simple way to make things happen.
When you begin looking at credit card options for new U.S. residents, you want to be sure that you understand the language that you’ll be sorting through. There are many specific terms to learn in order to make the best choice.
This is where a lot of credit cards end up costing people more than they would expect. While most credit cards don’t carry any sort of fee, some of them do, and it can be hefty. If you are considered an “at risk” credit card user (like someone with a low credit score or no credit score at all) or if the credit card happens to have a high balance ($10,000 or more, typically), you may have an annual fee. That fee can be anywhere from $25 to $500, depending on a variety of factors.
Thankfully, many cards that have an annual fee also have a number of benefits to them – lower interest rates, solid rewards programs, and great customer service. Sometimes, you can even get some of the fee as a rebate at the end of the year if you made all of your payments on time. Talk to the credit card company and see what the facts are behind the annual fee, if that’s something that you’re concerned about.
One term that every single credit card is going to have is most commonly referred to as “APR” – it’s the Annual Percentage Rate. This is going to be the interest rate that you pay in an entire year. For most credit cards, this falls somewhere between 15% and 30%.
Now, it’s important to know that this is an annual rate. That means, one month you may pay a percentage or two more or less, depending on circumstances and how much you’ve already paid. It’s something that the company will calculate, and they’ll let you know if and when things change.
Introductory Purchase Rate or Introductory Rate
There’s a difference between the introductory rate (also called an introductory purchase rate) and the APR. Many times, credit card companies will offer some sort of introductory option that you can get as a perk when you sign up for their card. It’s typically much lower than the standard APR – sometimes it’s zero! – and it only lasts a limited amount of time.
The introductory rate can last anywhere from 6 months to a year. Sometimes, it comes with a stipulation – that you make all your payments on time, that you spend a certain amount of money, etc. If you don’t meet that stipulation, then you have broken the contract and your rate will go back to the standard APR much earlier than agreed upon.
Lastly, you want to look at the rewards information. Many credit cards offer rewards nowadays, allowing you to get a lot of free benefits just for using your card. Sometimes, you’ll get bonuses for signing up with that particular company, others will just allow you to choose what it is that you want to get from them.
Look carefully into all of the details around the rewards info – what you need to spend it on, what you’ll get rewards for, etc. – and see if it’s going to be worth it for you. Good rewards can be a great way to actually enjoy using your card and get benefits for it.
There’s a lot to look at when you’re trying to find a credit card that meets your needs, and understanding the information that you’re presented can make the process that much easier for you. Use online resources like Nova Credit that have been designed specifically to present credible reviews and details on credit cards for newcomers to the U.S. You’ll have an easier time finding the right card and knowing that you’ve got the resources you need to use it properly.