No matter what you’re looking for you can find a credit card that can get if for you, from rewards to building credit to great travel deals.
The best thing you can do for yourself is to look at all of the features and then figure out what’s most important to you. For someone who uses their rewards card a lot, an annual fee might not be a big deal, for example. But make sure you’re looking at more than just the rewards. Look at the regular APR (not just the introductory special rate) and the interest rate that you’re being charged.
If you plan to pay off the card every month a high-interest rate might not be a problem, but make sure you know what you’re getting.
Before you decide to sign on the dotted line, let’s take a closer look at nine questions you should ask yourself or the company you’re looking at.
1. Is This Really Best For Me?
You’re going to find a lot of different cards that offer a range of different rewards and offers from cashback to miles and points to standard rewards. If you use a credit card a lot you could do really well with these types of cards, but you want to make sure it fits the type of spending that you’re going to do. Rewards cards can be good if they give you the best rewards for the areas you shop in (like groceries, gas or food).
For those who love to travel, a travel rewards card might be the way you want to go. These generally offer hotel points or airline miles that you can use for your next trip. You may even get a great bonus of miles when you first sign up. Of course, you’ll have to be careful about what you need to do in order to get that great bonus. Some of the requirements might be way too high.
Remember, you can’t just look at one card and decide that it’s the best option.
You should be looking at several cards to find out more about how each of them offers rewards and specials. You won’t be able to tell if the first card is good or not until you know how they stack up, after all. You may think that the fees or the interest are good, but when you start looking around you might see that there are plenty of better offers to be had. Spending a little time to compare at least three different options before you choose one is always a good idea.
2. Do I Really Need Another Card?
Some people always think that they need another card, especially when it’s going to give you something great, like 5% cash back where you love to shop or 0% interest for a set period of time or even a huge bonus on airline miles as a bonus. But it’s important to think about what you really need before you agree to sign.
When you’re trying to figure things out the first thing to consider is whether this card is really going to help you.
If you want to cut down on your debt then having a 0% interest rate for a while could be great because you can get the debt down a lot faster. Of course, you’ll want to know the final interest rate after the promotional period and the balance transfer fees as well. They could be as much as 5%.
If you’re trying to change the way you live your life you may be able to get some great bonuses with different cards. Those who spend a lot of money at the grocery store may want a card with good rewards on that grocery shopping, for example. Make sure you pay attention to a card that works for what you really need.
3. How Do I Spend Money?
It’s important to pay close attention to just how you’re spending your money and that starts with taking a closer look at your statements. They’ll tell you where you spend and how much you spend every month. That’s going to make a big difference in the type of credit card that you might want.
Someone who often has a balance at the end of the month is going to want a card with low APR, because you’ll probably be paying interest.
If you’re the type of person who pays off your card at the end of the month however you might want a rewards card and the interest rate might not be important. For someone who needs to be able to make larger purchases, it might be important to have a high credit limit.
4. Am I Likely to Get Approved?
Your credit score is going to have a huge impact on whether you get approved and that means it’s the first place you should look if you’re planning to apply for a credit card. A lot of banks and other companies will let you see your score for free. After all, when you apply for a credit card they’re going to run your score and that’s going to cause you to lose a couple of points right off. You might as well make sure you’re likely to get the card if you’re going to lose some of those points.
Someone who has a 700 credit score or higher is likely to get approved for just about any credit card and definitely for the low-interest rates you’re going to want. Someone who has a score under 550, however, is less likely to get approved unless the card is geared toward those with poor credit or toward helping you build credit.
5. What’s the APR?
The APR is how much you’re going to pay if you’re not paying that brand new card in full each and every month. The credit card company is going to charge you a fee for using their money and not giving it back. Your interest rate is going to vary based on your credit score, so you want to get the lowest interest you can, which means have a high credit score.
What you’re generally going to find on an application is a range of interest rates, because not all people get the same interest rate when applying for a card.
You might see something that says ’10.99% to 21.99% APR.’ This means that people who have great credit and the highest credit scores are going to get closer to that 10.99% and someone with bad credit and a low credit score will get closer to 21.99%. You may also see a special offer and things like fixed rate or variable rate interest.
6. What’s My Credit Limit?
Different types of cards will offer different credit limits and your specific credit rating is also going to affect your credit limit. If you have a higher line of credit or higher credit limit you can buy more, which means you’re going to have a lower credit utilization ratio and generally a better score.
On the other hand, if you’re going to spend too much of it you could be in trouble, plus they’re going to pull your credit report, which means a hit to your credit score.
7. Are There Fees?
You’re always going to have an APR on a credit card, which may vary or change over time. But you also want to know about different fees like special rates for different actions, like balance transfers (which are generally higher interest). You’ll also have things like a penalty rate if you’re late making your payments.
Some cards have a whole lot of fees. You may have an annual fee that you have to pay just for the privilege of having the card.
This is especially true with some of the best rewards cards. Plus you may have fees for international transactions, cash advances, late payments, and balance transfers and a whole lot more.
The best thing you can do is read through all of the details from the credit card company. It’s going to be a lot of reading, but you want to make sure you know what the fees are before you sign up. Sure, it’s great to get a lot of rewards, but you don’t want to get caught with too many fees.
8. Do They Report to the Credit Bureaus?
Not all credit card companies actually report to the different credit bureaus or they don’t report regularly. That means you’re not going to get the benefits of making payments on time and of that credit utilization change.
You want to make sure that your credit card is being reported promptly because that’s going to help you increase your score. So make sure you check the terms to find out about this.
9. Is Now the Right Time?
Did you know that there are some bad times to apply for a credit card? In general, if you’re going to be applying for any type of financing, for a car or a house, for example, it’s not a good time to apply for a credit card.
Anyone you apply through is going to check your credit report and seeing more available credit as well as more debt is going to look bad. For those who get new cards and then spend on them, it increases your debt ratio and that makes a financial institution a little leerier of giving you financing.
The most important thing that you can do is pay close attention to everything that you find about the credit cards being offered to you.
You want to put yourself in the best position possible and that means making sure you talk with credit issuers to find out the best deals you can get and make sure your card works for you.