If you use your credit card while traveling abroad, your credit card company will often charge you a foreign currency transaction fee. This fee can be as high as 3% of the total amount of the purchase. Here is a quick summary of the fees charged by major credit card issuers:

• American Express – 2%
• Bank of America – 3%
• Capital One – 0%
• Citibank – 3%
• Discover – N/A (generally, not accepted globally)
• HSBC – 3%
• JP Morgan Chase – 3%
• US Bank – 3%
• Wells Fargo – 3%

In any case, monitor your credit card charges closely when you travel abroad. You will find that credit card companies use different methods to calculate your exchange rate. Before you leave on your trip, you should call your credit card company to inquire about their charges and fees abroad.

Cash back credit cards offer cash-back rewards for the purchases you charge. Credit card companies will typically either send you a check at the end of the year or deduct the cash back you have earned from your credit card balance. Note that some credit cards require you to call in and inquire after your cash-back rebate, and will not send the money to you automatically.

The amount of cash back you receive will depend on the specific terms and conditions of your credit card. The typical cash back rate is approximately 1% of the total amount you spend. While some cash back credit cards offer a fixed percentage across all types of purchases, other cards offer different percentages based on the type of purchase you make. For example, a credit card may offer 5% cash back on grocery purchases and 0.5% on other purchases.

When you compare cash back credit cards, pay close attention to all of the terms of each card. As is the case for many other types of reward credit cards, cash back credit cards may have annual fees or higher interest rates than a credit card that doesn’t offer a reward program. Analyze your past spending to estimate how much cash back you can earn and whether a cash back credit card is really worth it for you. If you do not pay off you credit card balance in full every month, the higher APR will probably exceed the cash back that you have earned. Some credit cards may even limit the amount of cash back you can earn per year. And, consider choosing a credit card that will automatically send you your earned cash back at the end of the year.

Many credit card issuers offer credit cards with a regular APR lower than 12%. In order to qualify for a low APR credit card, you usually need to have excellent credit history (i.e. a great credit score). The higher your credit score, the more likely you are to get approved for a lower interest offer. Low APR credit cards are a good deal for consumers who carry a balance and seek to minimize their interest expense.

If you pay off your credit card balance in full every month, it may be worth it for you to have a credit card with no annual fees and a longer grace period. By paying your credit card in full, you will not incur interest on new purchases. Keep in mind that grace periods usually do not apply to paying cash advances and balance transfers.

If you carry a credit card balance from one month to another, low interest credit cards are the right choice for you. Credit card companies often offer 0% introductory APR on balance transfers and purchases for 6 or 12 months. In this case, your APR will change after the end of the introductory period. If you plan to transfer a balance, chose a card with a low APR and lower balance transfer fees.

But remember that credit card companies can and do change their interest rates from time to time. Many credit card interest rates are tied with the Prime Rate, the Treasury bill rate or another interest rate benchmark. When the corresponding rate changes, your regular APR will chage as well. If your credit card has a fixed rate APR, your credit card company will notify you before increasing your APR rate.

If you have bad credit or no credit, you might not qualify for most credit card offers. In this case, you may need to consider using a prepaid credit card or a secured credit card as an alternative.

Secured credit cards were designed for people who need to repair their credit history or establish a credit history. Once you are approved, the secure credit card issuer requests a deposit which then becomes your credit limit – that is, you can only spend up to the total amount of your initial deposit, much like a bank account. When selecting a secured credit card, make sure that the card issuer reports to the major credit bureaus. Paying off your credit card balance on time will help you to improve your credit history.

Alternately, you could apply for a prepaid card. Prepaid credit cards can be used just as any other credit card and approval is guaranteed. Prepaid cards also require you to pre-deposit a balance. The disadvantage of prepaid credit cards is that they generally do not report your activity to credit bureaus, and thus you will not be able to improve (or diminish) your credit score.

Charge cards are credit cards that require you to pay off your balance in full every month. Because charge card balances are not loans, charge cards do not carry an interest expense. There is, however, a late payment fee in case you fail to pay off you balance on time. American Express charge cards offer a membership rewards program including insurance benefits, hotel and travel rewards, and a loyalty program. Some charge cards may also allow you to pay off your balance over a longer period.

If you use a charge card without a limit as an alternative to using a credit card, you may see your credit score decline. This is because in place of a credit card’s limit, the credit bureau will often use the highest balance reached on your charge card to calculate your debt to available credit ratio. Thus, your used credit ratio may appear artificially high. Thirty percent of your Fico score, for example, is affected by the amount of money you owe.

If you apply for an instant approval credit card, your credit card application will usually be processed within seconds. In certain cases, more time would be needed to determine whether you qualify for a credit card offer. In order to receive an immediate decision, you typically need to have a very good credit history.

Student credit cards are designed specifically for college students. Student credit cards tend to have lower limits because most students do not have a stable, full-time income. Some card issuers view students as trustworthy borrowers, while others treat them just like any other customer without a credit history. For students who manage their finances well, student credit cards offer convenience of payment and a path to establish a credit history. For students who mismanage their finances, the accumulated credit card debt can become a substantial financial burden over time.

Advantages of using student credit cards:

• Parents often encourage students to get a credit card because they see them as a tool to teach their children about financial responsibility
• Students can use monthly credit card statements to analyze their spending habits
• Credit cards offer the convenience of paying for goods and services over the phone or the internet.

Selected student credit card issuers:
Citibank Student Cards
Discover Student Cards
Capital One Student Cards

Secured credit cards are credit cards for people with bad credit or no credit history. Secure credit cards are backed by a security deposit in order for the consumer to build or to rebuild their credit history. Typically, you can deposit anywhere from a couple of hundred to thousands of dollars into a security deposit and this amount will correspond to your credit line. For example, if you deposit $1000, your credit line will be $1,000.

Before applying for a secured credit card, you should find out what fees come with the card and whether the credit card issuer reports transactions to credit bureaus. If the issuer does not report your activity, the secured card will not help you build your credit history. Most secured credit cards carry an annual fee. Do NOT do not apply for any offers that list a 1-900 number as their contact. The FTC warns of reported scams in which companies advertise 1-900 numbers and consumers end up paying for placing calls to a company that never had any intention of giving out secured credit cards.

If you are not able to qualify for a secured credit card on your own, you can ask a trusted friend or a family member with good credit history to become your cosigner. Cosigners will be responsible for your debt in the event that you do not repay your balance. Once you get approved for a secured credit card, use the credit card responsibly. Keep track of your expenses and make sure you pay your bill on time. In a few months, check whether your credit history reflects your payment record. Eventually, when your credit record improves, you should be able to get a regular credit card with better terms.

For the most part, a prepaid credit card can be used just as any Visa, MasterCard or American Express credit card. The main difference is that a prepaid credit card allows you to spend only the amount that you have preloaded with the card issuer. In other words, you cannot spend what you do not own.

Prepaid cards offer a number of advantages:

• Easy approval – issuers do not need to check your credit history, so you do not need to worry about your credit score. Your approval is virtually guaranteed upon verification of your identity.
• Control – if the prepaid card is given by you to your children, for example, you can control how much they can spend and they cannot go over your limit.
• No monthly bills – obviously, prepaid cards are preloaded with money, so you do not pay any bills and you cannot incur any late payment fees.

While some of the disadvantages of using a prepaid card include:

• Prepaid cards will not repair your credit history – prepaid cards’ activity generally does not get reported to credit reporting agencies
• It is not a source of emergency funds – unlike credit cards, you cannot use a prepaid card as a source money in an emergency
• Additional fees – some prepaid cards may carry a number of different fees: card application fees, monthly maintenance fees, charges for balance loading, ATM withdrawal fees, inactivity fees, minimum required balance fees, to name a few

Features to pay attention to before you apply:

• What are the card fees?
• What are your reload options?
• Is online account management available?
• Can you have additional cards under the same account?
• Does the prepaid card issuer offer bill paying services?
• What are the minimum and maximum balance limits?

Below is a list of popular prepaid cards:
AccountNow Prepaid Card
Vision Premier Prepaid Visa Card
SilverCard Prepaid Mastercard