A credit card's grace period refers to the number of days before the card company starts charging you interest on new purchases. Many consumers think that with practically every card all their purchases are interest-free for at least 25 days regardless of the previous balance. "But, the fact of the matter is it's getting harder to find a credit card that offers that kind of free ride on finance charges," says Janet Kincaid, a credit card specialist with the FDIC in Kansas City.

Some cards still offer a "full" grace period. That would mean 25 days or more of interest-free purchases, even if you're paying interest on an outstanding balance from the previous month. However, with the typical credit card nowadays, if you carry over as little as a penny from the previous month's balance you can expect to be charged interest immediately on new purchases. And, if you have a card with no grace period, you always pay interest on new purchases from the day you make the purchase, even if you pay your bill in full.

The bottom line: Try to understand a card's rules governing the grace period as well as the interest rate and fees. You can do this by reading the literature provided by the card issuer and, if you have questions, calling what's usually a toll-free number for customer assistance. Also, think about how you plan to use a card, especially if you expect to carry a balance most months. Then try to choose and use the card that's best for you.

...Direct Deposit Is Safer Than Checks in the Mail

This is for consumers who like to receive their pay or benefit checks in the mail instead of having the funds directly deposited into their bank accounts. According to a U.S. Treasury Department analysis of federal benefit payments during 1999, problems with paper checks (such as getting lost, misplaced or stolen out of a mailbox) occurred 26 times more often than when the money was sent electronically. Also, the Treasury says, a lost or stolen paper check can take about two weeks to replace, while an electronic transfer problem can generally be traced and corrected within a day or two.

Note to Readers An article originally published in the Summer 2000 edition entitled “Conditions in ‘Living Trusts’ Can Limit Insurance Coverage” has been removed from this page because of changes in the deposit insurance rules adopted by the FDIC effective January 13, 2004. For information about the revised rules, see “New Rules for Revocable Living Trust Accounts.”