Finding the right credit card is not necessarily easy. If your credit history is iffy, you want to be extra careful not to apply for the wrong card. And too many applications -- whether or not you get the cards -- could hurt your credit score.
Take the time to study the fees, too, or that convenient little piece of plastic can cost way more than you realize.
Under new federal law, credit card issuers must, beginning July 1, more clearly spell out the terms of their offers.
The Credit Card Accountability, Responsibility and Disclosure Act of 2009 banned most interest rate increases on existing balances and offered other consumer protections, such as preventing companies from raising interest rates in the first year. But the annual fee and the interest rate are not the only costs of a credit card.
Card issuers are finding ways around the new restrictions. Ever hear of a $95 "program fee" in the first year? First Premier Bank charges this to consumers with low credit scores.
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In the past, you would have had to dig through fine print to spot some of these more unusual fees. No more. Boxes on disclosure forms for a credit card offer will include all sorts of fees that could apply on that card. For consumers with subprime or low credit scores, for example, a card might have a set-up fee, an annual fee, a participation fee that can be charged monthly for having the card, and even an extra fee for a second card.
The interactive Federal Reserve site launched in May, www.federalreserve.gov/creditcard , shows that in some cases a consumer with weak credit who is offered a $250 limit on a credit card could only have access to $204 of credit after the fees. Click on "Learn More About Your Offer."
Ian Cohen, CEO of Credit.com, said the extra information that the Fed website now offers can be a huge help when shopping for a card.
"It's a great first step," Cohen said.
But the site takes some work.
Consumers can't use it for an apples-to-apples comparison of credit card deals.
Cohen would like to see some sort of unit-pricing eventually created for credit cards that would roll every fee and rate into one number and tell a consumer flat-out the exact cost, for example, of carrying a $1,000 balance on a specific card for a year. Think of this idea as something like an extension of the nutrition labels on food.
We're nowhere close to that point.
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But what we do have is a vast database at the bottom of the page for the Federal Reserve site under the heading "Consumer Credit Card Agreements Search." Or see www.federalreserve.gov/creditcardagreements .
The site has data from about 1,000 agreements and 325 card issuers. And the Fed expects the number to grow.
"The database will help consumers compare credit card agreements and find a card that best suits their personal finance needs," the Fed said in announcing the site.
While this might sound useful, the reality is a cumbersome batch of data to be sifted.
"It's a good idea, but it's very difficult for consumers to understand," said Bill Hardekopf, CEO of LowCards.com. "If you go looking for a specific credit card, it's pretty tough."
Say you were interested in a card from the Michigan State University Federal Credit Union. You hit "search agreements" and scroll until you found that credit union.
Then there are four areas to click. One of those offers information on the Oakland University Alumni Association Visa. But the terms aren't listed in a special format. Instead, you see an awkward copy of a pamphlet.
If you scroll for Chase Bank, you'd get 28 options of places to look for terms. But you would not see names of specific cards.
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"I don't know how consumer-friendly or valuable they are," Hardekopf said.
A spokesperson for the Federal Reserve said modifications are planned to make the site easier to navigate.
Ruth Susswein, deputy director for national priorities for Consumer Action, an advocacy group, said consumers also need to realize that the agreements posted on the Fed site may not be the actual agreements for their cards.
Not all credit card agreements are available in the database. The Federal Reserve Board's recent credit card rules exempted issuers with fewer than 10,000 open accounts from submission.
So the online information, Susswein said, could have limited value. She advises consumers to contact their credit card companies to be certain that they have a copy of their own agreements.
The Credit CARD Act of 2009 requires credit card issuers to post account agreements on their own Web sites.
Card issuers also are required to make consumers' individual credit card agreements available to them upon request.
But the Fed's new site should not be ignored by credit card shoppers. It's a work in progress -- and could prove more useful down the road. Meantime, remember that shopping for a credit card should require a little more effort than shopping with one.
