Source: AJC
Ten thousand dollars in credit card debt sneaked up on Randy Arroyave like a ninja in the night. When he got his first card, he would only use it for big-ticket items, like a $300 leather coat or trips home to Latin America. Then he would pay it off, diligently but slowly. “I was very careful and very apprehensive to use it,” recalled Arroyave, 30.

But he relaxed his credit card code when he quit working to attend Hunter College of the City University of New York, using it for meals, entertainment and small things. It wasn’t long before he had two cards — and mounting debt. And still, the tempting offers for new cards arrived daily in the mail. “I didn’t check for the interest rates,” he said. “I chose the first one in the mail that looked pretty.”

Like Arroyave, millions receive a dizzying array of credit offers. Banks promise everything: low introductory or annual interest rates, rewards programs, and cards that come in gold and platinum. Making sense of it all can stump even the most financially savvy. But a little knowledge can go a long way. “Know how much you spend,” said Curtis Arnold, founder of CardRatings.com. “And know your lifestyle.”

First, you need to decide how you’ll be using your card, Arnold said. If you plan to carry a balance, then the annual percentage rate is going to be the most important piece of information. The APR is the amount of interest you’ll pay on any balances you carry. The lower the rate, the better. Just a few percentage points can make a huge difference, saving hundreds of dollars and cutting the length of time it takes to pay off your debt. Also, beware of introductory offers. Some cards promise rates as low as 0 percent interest on balance transfers, but if you miss one payment, the rate can jump as high as 30 percent.

Many of these deals can also come with hidden fees attached. “They’ll talk about the 0 percent rate [on balance transfers], but generally they won’t advertise they’re hitting you with a $300 fee,” said Arnold. And remember — be honest with yourself about your ability to pay off your balance before your introductory rates expire. “Everyone has good intentions, but life happens,” said Arnold.

Reward cards may seem tempting, but their higher interest rates nullify any benefits if you carry a balance. But if you can afford to pay off your balance each month, a reward card may offer the best deal. Now all you have to do is sort through the offers and choose the right one. “It’s not one size fits all,” said Monica Beaupre of American Express. But a 2004 law sponsored by Sen. Chuck Schumer (D-N.Y.) made it easier. It requires all solicitations to include a table of information, called the Schumer Box, which contains most of the information you’ll need. Web sites like CardRatings.com, which ranks hundred of credit cards, can also make comparison shopping easier.

Which is exactly what Arroyave did. When he graduated from Hunter and started working as a biology lab technician, he set out to rid himself of his credit card debt. His goal: freedom in six months.