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Making Sense of Plastic Promos

There’s a battle raging. And we’re not talking the Dark Side of the Force vs. the Jedi Knights. We’re talking about the battle for consumers’ wallets and for survival in the credit card market. That’s why some 7,000 credit card issuers are deluging you and other consumers with their latest, greatest, gotta-have, must-see credit card offerings.

What’s a shopper to do?

Fall back on the basics--What’s it going to cost you to use the card? A lot depends on how you use the card.

If you carry over a balance, a card with a low annual percentage rate (APR) is what you’re after. Credit union variable-rate credit cards charge an average APR currently more than one percentage point lower than bank credit cards.

If you always pay your balance in full, interest rate isn’t an issue so choosing a card with no--or the lowest--annual fee makes sense. Fewer credit unions than banks charge annual fees to begin with and, of those that do, the average fee is more than $2.25 less than the annual fee on the average bank credit card.

Check out fees--With all the attention surrounding interest rates, especially short-term teaser rates, it seems many card issuers have switched tactics to rely more heavily on fees as their moneymaker. According to the U.S. Public Interest Research Group, government data show credit card fee income is one of banks’ fastest-growing sources of income.

In particular, late fees on bank credit cards are soaring, with the most exorbitant topping out at $35. To add insult to injury, some issuers are charging a penalty interest rate on top of a late fee. A relatively new cash cow, the penalty rate hikes a card’s interest rate--permanently--above 20% once the cardholder misses a payment due date. Ouch!

And watch for shortened grace periods: Some have shrunk from 25 days to 20, leaving cardholders with an even narrower window of opportunity for mailing payments on time.

For the straight scoop about the check out a credit card program at a credit union. And stop paying more for credit than you have to.