The market for
credit cards has changed, so when you
apply for a credit card, there are important things you should be aware of.
A little time spent learning the basics can make a big difference in the costs and benefits of using a credit card.
1. Decide how you are going to use the credit card.
Credit cards are designed for different lifestyles and usages.
It is important to evaluate how you anticipate using your card before selecting among the many options.
Of course, it is your choice, but selecting wisely can save money and make the credit card more useful.
Things to consider include the credit limit you need, whether you will pay off the balance every month and how much you will use ATM's.
2. Evaluate all the fees and charges.
It is much easier to evaluate the fees charged by a credit card provider due to recent legislation.
Different fees are charged to make credit cards profitable for the providers. These include:
Annual fees
Monthly interest charges
Cash withdrawal fees
Late fees
Over limit fees
Depending on how you are going to use your credit card, these fees can add up very quickly, so you should be aware of them when you
apply for a credit card.
3. Make sure you qualify.
Most companies offer several levels of cards for applicants with different needs and credit levels.
Before you spend time applying for a specific card, check your credit score.
Certain cards that have the best offers are only available to high credit score applicants.
Applying and being turned down can affect your credit score and eligibility for other cards.
If your credit score shows problems, you might be approved, but given a lower credit limit than you want or need.
4. What kind of rewards for usage are offered.
There are some really attractive programs offered by some companies that reward you for use of your credit card.
These rewards vary widely in their value. When you apply for a credit card, the
Reward Credit Cards program can be a deciding factor.
There are significant differences in how rewards are earned and used. For all the differences in how they are administered, there are basically two incentives that are offered. It is important to understand how rewards are earned and restrictions on how they are used.
For example, some Reward Credit Cards program take back earned rewards if the monthly payment is late.
One reward system relies on cash back. In this system a user is credited a specific percentage based on where and how the card is used.
The amounts offered vary but are generally in the 1% to 3% range.
The second system uses points as a method of rewarding use. A certain number of points are awarded based on dollars charged.
Promotions can also add points for certain products and services.
5. The advantages and disadvantages of a credit card.
An important factor to consider when you apply for a credit card is the reality that a credit card makes it easy to incur debt.
Debt has to be paid back and can be a real burden if convenience in charging outweighs an ability to pay. Plan on using credit wisely.
You will maximize the value and convenience of your new credit card by spending a little time up front choosing one that fits your lifestyle.
