So you have decided to take the plunge. You need a way to buy now and pay later. You have decided to apply for a credit card. But have you really thought it through?

Credit cards are great for a lot of things. They allow you to shop till you drop and not have to worry about payment until the bill comes in. They come in handy when making reservations and they can help repair poor credit. But applying for a card is not a decision to be taken lightly. Here are a few things to consider:

1. Before you start applying for every credit card under the sun, remember that every time you submit an application, it will show up on your credit report. Too many inquiries all at once could negatively affect your rating.

2. Be very aware of the processing fees. These can be quite high and could cost you a hundred dollars or more before you even start shopping!

3. Have an idea of what your main use for the card will be. Is it going to be used often for day-to-day expenses or kept for emergencies? Answering this question will help you determine which interest rate and credit limit you are looking for.

4. Read every detail of the application. Yes…. this even means all of that nasty fine print. There will be important details in there about prepayments, late payments and penalties. It is tedious to read through all of the tiny details but it will be worth it in the long run.

5. The most important thing to do before you apply for a credit card is to look into your credit report. It is possible for there to be mistakes on your credit history that are preventing you from getting the credit card you want. If there are errors, be sure to follow through with having it corrected. Your credit history is very important.

Sometimes trying to understand your credit card interest rate may seem more like an advanced algebra class!  So what is that percentage rate that shows up on every bill? And how is it calculated?  We break it down for you.