Choosing a credit card is a big decision. There are a variety of cards available, and companies offer different terms and conditions for their plans. If you are in the market for a new credit card, there are some important things you will want to consider before you submit your application.
1. How the card compares to other options
If you are in the market for a credit card, chances are that you are comparing the terms of several cards. Before you apply for one, do a side-by-side comparison of multiple options. Do an online search for the card name along with terms like “customer service” and “complaints” to see what others have to say about the card and its services.
2. Interest rates
Many credit cards will offer a low introductory interest rate, but this is likely only available for the first six months that you have the card. While the introductory offer might be appealing, you are really buying the regular rate, so make sure that you know what your final rate will be.
Many credit card companies offer the chance to earn reward points by charging items onto their cards. After you accumulate a certain number of points, you may be able to exchange them for merchandise, airline tickets, and other rewards.
Credit card companies are constantly looking for ways to make money off of their customers, and charging fees is one such method. Common charges include annual feels, transaction fees, and fees for cash advances and balance transfers. Look for a card that offers reasonable fees.
5. Credit limits
A credit limit is the total amount of money that your credit card company will allow you to borrow. This limit is usually based off of your credit history. You do not want to be close to maxing out your credit limit each month, as this can hurt your credit rating, so it is important to find a card with a suitable credit limit for your needs.
6. Fraud protection
With credit card and identity theft occurring more frequently, it is important to know how potential creditors will protect you. Federal regulations cap your liability limit for unauthorized credit card charges at $50, but many credit card companies will go even further to set your limit at $0.
7. How a card’s variable rates work
If you are applying for a credit card with a variable rate, it is important to understand how they work. Variable interest rates have a tendency to be confusing, and some cards will make your rate increase over time. Review your credit card contract to understand when and how your rate may change.
While you may have every intention to stay caught up on paying your credit card bill, it can be helpful to find out how you will be treated in the event that you do fall behind.
Will there be penalties in terms of losing reward points or cash back benefits? Will you be required to pay late fees or be assessed a penalty rate? All of this information can make or break your decision to apply for a credit card.
9. Your spending habits
When looking for a credit card, it is important to first decide how you will use it. Do you anticipate carrying a monthly balance, or will you pay the card off each month without fail?
If you think you will carry a balance, your main priority might be to find the lowest possible interest rate. However, if you feel that you will pay the bill in full each month, a card with no annual fee and customer rewards may be a better option.
10. How many other cards you have
It is important to ask yourself if you really need another credit card before you fill out an application, so consider how many other cards you have. There are few situations where it is a good idea to have more than one or two cards, as having too much credit available could lead to unmanageable debts and bad decisions. Applying for too many cards could also be detrimental to your credit score.
Your mailbox is likely full of credit card offers and applications, so it may be difficult to determine which is right for you. By doing your homework and researching your options, you can find the right credit card for your family.