Military Money and Finance

CREDIT CARDS
Choose a Credit Card to Suit Your Lifestyle

If you have good credit and are in the military, credit-card issuers will tempt you with endless new credit offers. It's easy to end up with a wallet full of credit cards.

STOP!

While it's always good to have a backup card for an emergency, a general credit card rule is to stick to one card - the one with the best interest rate for the longest amount of time. This will minimize the number of bills you pay monthly, and maximize your credit rating. Good military money management all around.

Which card is the right credit card for you in the military? One good choice can be a no-fee rewards credit card that you pay in full every month. Rewards based credit cards can offer generous perks to enhance your military lifestyle, provided you are prepared to pay the balance in full each month. However, if you do carry a balance, be aware that with these credit cards, you may be subject to a variable interest rate as high as 19%. And if you're late with payments or used up too much of your credit limit, you may get a penalty as high as 30%.

Be aware that credit card penalty fees have been on the rise for years. The average late fee in 2005, for example, was $34, up from $13 in 1995, according to the Government Accountability Office. Over-the-limit fees, meanwhile, were $31, up from $13 during the same period. Ouch.

If you do plan to carry a credit card balance, choose a credit card with an interest rate well below today's 14.1% average.

A 0%-balance-transfer teaser is tempting, but you may be subject to transfer fees as high as 4% of the balance. And if you can't pay it off within six or 12 months, you'll be left with the hassle of chasing the next 0% credit card offer.

For simplicity and consistency, choose a card with a consistent and low interest rate. The American Express Blue card charges 4.99% for the life of the balance you transfer. Discover Card also offers low interest rates for the life of the balance. There are new credit card offers on the market all the time. Your busy military life may not leave you much time to keep abreast of them, but resolve once a month to research internet for the best credit card rates and the best offers.

Securing and maintaining the best credit cards is just one more smart military money move.