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Step 1
Research the credit card policy for late fees (up to $40 per month) and over-the-credit-limit (OCL) fees ($40+ per month). Be aware that an account balance can be pushed over the limit by the addition of a late fee and monthly interest. Ask about the late fee and OCL fee rebate policy.
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Step 2
Take into consideration that the credit card's annual percentage rate (APR) is calculated based on the prime lending rate plus a specific number of points. Understand that the rate can change from one billing cycle to the next based on fluctuations in the prime lending rate. Ask about when the rate may vary and adjustments.
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Step 3
Understand performance pricing, in which credit card companies/lenders review cardholders' credit reports and increase APRs by as much as 23 points based on reports of late payments on other accounts, over the credit limit on other accounts, newly opened accounts, new debt, increased APR on other accounts and/or a credit score that falls below the lender's threshold.
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Step 4
Be aware that a period of "interest-free" can be defaulted during the repayment period if a payment is late. Ask if provisions allow that interest waived during the "interest-free" period can be added to the balance later on for any reason.
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Step 5
Open and maintain a minimal balance on one major credit card. Keep credit inquiries to a minimum to avoid "performance pricing" reviews and APR increases.
