Everybody wants the card that costs the least to own. But how do you find that card? And just what are the costs of owning a credit card?

Basically, your cost of owning a card is equal to interest plus fees. You'll pay a specified interest rate for your card purchases. You can also get cash advances with the card and you'll pay interest on each of these transactions too. In addition to interest on purchases and cash advances you'll pay various fees and charges such as annual fees, membership fees, late fees and over limit fees.

INTEREST-- THE ANNUAL PER CENTAGE RATE (APR)

APR for Purchases.

Card providers often have an introductory APR and an ongoing APR. Introductory rates are marketing incentives and they typically last for a few months, then revert to the specified ongoing rate. Introductory rates usually come with stipulations that you must pay on time and not go over your card's limit-- or the introductory rate will go to the ongoing rate. APRs are either fixed or variable. Variable APRs are tied to a financial index (what the bank has to pay for the money it borrows). So if the card provider's cost of money goes up, your cost-- your APR-- will go up proportionately to cover his costs. Obviously, if you can get a fixed interest card when interest rates are low, then you've beat the system.

Your APR will also go up if, after your card reverts to its ongoing APR, you pay late or go over limit.

APR for Balance Transfers.

Some card providers offer temporary low interest balance transfers as incentives to new applicants. The rate can vary widely-- an APR as low as 0% is currently advertised. The low rate will prevail for a specified period then revert to the ongoing rate. But even before the introductory period ends, late payments and over limit stipulations can make the rate revert to the higher ongoing APR.

APR for Cash Advances.

You will pay an interest rate for the cash advance when you get it. Then you will pay an ongoing APR for any amount from the advance that remains unrepaid and carried on your statement. The initial cost of the advance is typically 2% to 3% (a minimum of $2.50 to $3.00 is common). Then the ongoing APR on any unrepaid portion of the loan is usually about 18% to 20%. Cash advances left on the card are clearly expensive money.

FEES and CHARGES.

Fees include annual membership fees, late fees, over limit fees and other add-ons like "setup" fees that are found on subprime cards. You can incur significant added monthly expense by not paying on time and going over the limit. (In addition to these charges your interest rate may also go up!). Late fees and over limit charges are typically $25--$30.

You card should have a "grace period" or "free period" whereby you can avoid paying interest on the purchase provided that you pay the balance in full before the next billing date.

The Costs of Less than Perfect Credit.

Which card you can finally qualify for depends on your credit record. The cost of credit can be likened to car insurance-- drivers who have good records are considered good "risks" and therefore pay less. Those whose driving records are less than perfect will pay more for insurance. And, like new drivers just starting out, you will pay more for credit if you've never had credit before. Higher costs due to damaged credit or no established credit record will appear as higher APRs, lower limits and added costs.