Keep in mind that every day you have an outstanding (i.e. unpaid) balance on your Visa card past this due date, you will pay interest. Just how much interest you pay depends on how credit card bank calculates interest. Some are generous enough to only charge interest on the difference between the balance due and what was paid (known as the adjusted balance method). In this case, if the bill was $1,350 and you paid $1,000 by the due date, then you would only end up being charged interest on $350. At a 10% interest rate, that would equate to $35 per year, or about 10 cents per day ($350 X 10.00% / 365 days).

Some financial institutions are not that generous. Some force you to pay interest on the average balance (which gets into very complicated mathematics) while others charge interest on the entire amount if the entire amount is not paid in full (known as the previous balance method). The latter one is how the financial institution I used to work for calculated it. I've seen someone pay all but the change due on their bill and get socked with $10 or $20 in interest. Of course when they bring this up to their attention we happily reverse it (cause let's face it, putting your foot down over charging $20 since the member was 47 cents short on his payment is a little excessive).  Not all financial institutions are that generous though; some would rather fight to the death to screw you out of the $20.  If that's the case, I say you should argue with them about it and if they refuse, pay off your balance as soon as possible (or transfer it to another card) and take your business elsewhere.

To continue the above example: if I paid $1000 of my $1350 balance due, I would be left, of course, with a $350 balance. But rather than paying 10 cents a day for each day after the due date, I would pay 37 cents a day (or $135 per year). This may only sound like, well, pennies to you (cause technically it is) but the differences are astonishing when you consider the average American has over $4,000 in credit card debt. At this point, you can see where "just pennies" really matters.  Feel free to read about the latte factor and see how these pennies really will hurt you over time.

Still even other financial institutions charge interest to purchases made between the statement ending date and when a payment is actually received. This is the most favorable method for banks (and therefore least favorable to us customers) and is known as the one-cycle or two-cycle average daily balance. I would like to think that very few banks still do this, but you definitely want to read the fine print to find out if the credit card you have or are looking to get is from one of them!

Here is a pretty good comparison of the different interest rates are charged:

Annual Fees

For the most part, annual fees are nothing but a means in which for a credit card company to drain free money from you. Except for rare occassions, you should never have to pay an annual fee on your credit card.  Those rare occassions would be:

1.  If the card offers airline miles (or some other sort of points system)
2.  If you have really adverse credit

Even if one or both of the situations above pertain to you, I still suggest you keep searching for another card.  In this highly competitive world, there always seems to be somebody willing to beat what seems like an already good deal.

Rates

The annual percentage rate (APR) is also a very important thing to look for in a card.  The APR you have on your card should correlate to your credit history.  This means, if you generally pay all of your credits on time and pay at least the minimum, your APR should be relatively low (hopefully in the 9 to 10% range, but no more than 12 or 13%).  If you have had credit troubles in the past, then you may end up getting an APR of 15 to 20% or even more.  Bottom line, however, is that if you pay off your credit cards in full each month (as we all should) then the APR doesn't matter.  It is only if you carry a balance from month to month that really matters.  And since most people do carry balances, the following advice goes for most of you.

What to do if you have high balances...

Let's just say you have a credit card with a high rate (15% or more) and you want it lowered, what can you do?  Even if you have a card with a 10% rate and you feel that is too high, this advice would still work.  So what are your options?  Well, aside from paying other debts on time and improving your credit history and hoping that this credit card company will notice how much better you're doing and adjust your APR accordingly, there is one simple trick that most people don't know.  Call the credit card company itself and ask for a lower rate.  Does this work?  There's no guarantee that they will lower your rate, but it has absolutely worked for me.

You see, credit card companies are much like salespeople: they will offer you something at first and hope you bite at it.  If you accept it, then great.  That means more commission/sales for them.  But, keep in mind that many times a salesperson will mark up a price above what they actually intend to get on it.  Often times, they hope that you settle on the first offer, even though they intend to offer more and more until they can get the sale.  It's amazing how low you can go in these negotiations.

This concept is foreign to many Americans, and reasonably so (since we don't go to Wal-Mart and negotiate the best price with them).  But in many countries, negotiations are all a part of the selling/buying process.  For someone to take the initial given price would, in a sense, make them a "sucker."  The whole point of negotiations, in this case, is to get the buyer and seller to agree on the best price for both of them.

The same could be said for a credit card company.  You apply for a card, and although you might be eligible for a 10% rate, they might start you at 15%.  That 5% difference can mean a lot more money for them if you carry balances each month. 

What if the credit card company refuses, or doesn't lower the rate enough for your liking?  Well, luckily we live in a free society, which means you can always try to transfer your balances to another credit card company at a lower rate.  There's no guarantee that you'll be able to get the other credit card, or that the rate will be lower, but what is the alternative?  Just accepting higher interest rates and paying more money than you really have to...

Balance Transfers

There are few things in this life more reassuring than to know that you can transfer a balance from a higher rate credit card to a card with a lower rate.   But keep these things in mind:

1.  Is the lower rate just an introductory rate?  If so, when does it expire?
2.  Is there a balance transfer fee?
3.  Is there a "minimum purchase required" type catch?

Most of the time, the low rates offered for balance transfers are an introductory rate.  That means that, for example, 6 months after you transfer your balances to your card, it will jump from 0% (or whatever the introductory rate is) to most likely 7% or more.  It is important to know what the stipulations are, cause they can either work in your favor (if you know you'd be able to pay the balance off in 6 months) or may work against you. 

Another way that balance transfers can really hurt you is with balance transfer fees.  This is not to be confused with regular finance charges/interest.  The balance transfer fee would be a lump sum fee, usually a percentage of the amount transfered.  Typically these fees are 3% and usually have a limit of $50.  This means if you transfer $1,000 to the card, they will charge you another $30.  So, in essense, you go from having a $1,000 balance on one card to a $1,030 balance on your new card.  It is possible for the balance transfer to still be worth it even if there is a fee, as long as the old card has a much higher interest rate or the balance transfer is a large dollar amount.

The limit of $50 is reached if the balance transfer exceeds $1,666.67 (3% of $1,666.67 is $50).  So, if you transfer $2,000 to the new card, you'll only pay $50 (rather than $60) which is only 2.5% of the balance transfered.  If you go even further and consider a $5,000 balance transfer, then paying the $50 transfer fee may be well worth it to you.  Instead of paying 3% of the balance transfered (which would equate to $150) you end up only paying 1% to transfer the balance.

Word of warning: when you send in a payment, the payment automatically goes towards paying off the lower interest rates first.  This means that any time you make a balance transfer onto a card and then use the card for purchases (while the balance transfer is still unpaid), those purchases are the last thing to be paid off.  Once the charges post to the account, you will pay interest onto all of those charges until the card is paid off completely.  Now there might be cards out there that do not follow these same rules, but this is the general rule.

So let's just say you transfer $1,000 to the new card (and avoid a balance transfer fee) that has a 0% balance transfer offer, and a 9.99% rate on purchases.  You then charge $500 on the card the first month.  Total due will be $1,500; the minimum payment due will most likely be between $30 or $45 (2% or 3% respecively).  Let's just say you send in a payment of $550 (to pay off the balance charged during the month, as well as $50 to go towards the 0% balance).  Instead of having a balance of $950 and no interest charged that month, you will notice that you have a $950 balance, but you will also be charged a little over $4 in finance charges (9.99% X $500). 

The most recent examples of credit card sneakiness that I have found was from Discover.  I'm not sure what the technical term for this is, but I would call it a "minimum purchase requirement."  What the fine print reads is that in order to keep the "balance transfer rate," you are required to make minimum purchases each month on the card.  Usually the minimum purchase is only around $25 or so.  Regardless of the minimum, you will see how requiring minimum purchases (as detailed as a Word of Warning above) will cause your 0% rate to be a closer to"

Points

So you've decided to go with a card that offers either airline miles or some sort of points sytem, huh?  Well, that's great.  As long as you don't spend years paying off the thousands of dollars spent on furniture and clothes that you purchased unnecessarily, simply so you can get a "free" ticket to Las Vegas.  The key is definitely to treat this credit card like all the others you have and not to spend hastily just for the "bonus points."