If you have never had a credit card before, the application process can be confusing. Deciding which credit card is right for you can be overwhelming. Don’t be fooled into applying for the first offer you receive. Research to find the credit card that works best for your situation.
Is there an annual fee?
While an annual fee may not be a deal breaker, it is best to know if the rewards or benefits of the card are worth the amount the credit card company charges annually. Annual fees range from $55-105/year depending on the type of credit card. If you do not plan on using a rewards card in order to earn more than that in points or credits in the year, then this card may not be the right one for you.
Is there an introductory period?
Introductory periods are great because you can usually get 0% interest for some extended period of time. If you plan to make a big purchase that you cannot pay for in cash immediately, but will be able to afford in a few months, this option could be perfect for you. This means that you could make your purchase, but not pay interest on it for a number of months. If you do not plan on paying off your purchases quickly, then it may be best to reconsider getting a new credit card.
Are balance transfers free?
If you are trying to pay off your debt, balance transfers can really help. Balance transfers allow you to transfer the balance of one credit card to another. Why would you do this? Let’s say you have a credit card with a 20% interest rate and one with an 8% interest rate. If you want to pay the credit card off, transferring it to the lower interest rate would allow you to pay more towards the principal, or non interest balance, which will allow you to pay the credit card off faster.
What is the APR?
When most people apply for a credit card, they look at all of the introductory benefits of the card. Well, let’s say you apply for a new credit card with the intention of paying the balance off within a few months. What happens if you lose your job during this time? You may no longer be able to pay off the card, but you will still have the balance due. Once your introductory period is over, you will have to pay the standard APR. If the interest rate is high, you could end up paying much more than you bargained for. Pay attention to the standard rates before applying for a new card.
Are there any rewards points offered?
Rewards cards can range from cash-back options to redeemable points. Consider your need for a credit card and use that to decide whether or not you should look for a rewards or loyalty cards. If you are planning a vacation in the next year, you may decide that a travel card with a introductory points would be most beneficial. Many of these cards will provide points for each dollar spent on approved purchases that can be used for travel, food, or cash.
Which credit cards do you prefer?