There are some critical questions to pose before accepting one of the credit card offers
likely to appear in your mailbox this month. Sandwiched between the incredible interest
rates and outrageous cardholder rewards there are some rather stark realities.
Evaluating credit card offers is about a whole lot more than going with whoever dangles
the most delectable looking carrot. There can be pretty sharp sticks hiding in there too.
Here’s what you need to consider to understand what’s really going on.
Your Spending Habits
Why do you feel you need a credit card? What will you be using it to do? Is it to serve as
a safety blanket for emergency situations, or will you use it for routine buys? Do you
plan to use it primarily when traveling?
Different offers serve these scenarios in different ways
Travel perks might dictate your choice in one circumstance, where deferred interest
might make more sense in another situation. The only way to determine which offer will
serve you best in these regards is to take a good look at your spending habits before you
agree to accept a card.
Associated Costs
Does the card have an annual fee? How much is it? Will the perks that come with having
the card outweigh the annual fee? What’s the annual percentage rate? What happens if
you don’t pay the balance in full each month? What happens if you do?
If you’re using the card heavily, you’ll rack up a lot more rewards than if you use the
card infrequently. If that rewards card has an annual fee, it might not be worth it. If
you’re just starting out and all you can get is a secured card, can you afford to have it?
How do they want you to come up with the security cash? Will complying deplete your
savings?
The Devil in the Details
Every offer looks better than the next—until you comb through the six-point type on the
back of the application. That’s where you’ll learn that deferred interest they’re touting
so heavily applies only to your first purchase with the card.
What does the interest rate go up to when that zero percent deal expires? How much
are they going to charge for late payments or cash advances. What happens if all you
can make is the minimum payment?
Speaking of which, should you ever find yourself in a situation in which you cannot
afford the minimum payments on your obligations, you’ll do well to avail yourself of the 2 services of a company like Freedom Debt Relief. They can help you develop a plan to get your finances back on track.
Your Credit Score
This can be a significant factor when it comes to determining the nature of the deal you
can get from a credit card issuer. While you might be getting all sorts of mouth-watering
offers from card companies, if you look closely, they always say something like “On
approved credit.” Or, “These deals are reserved for those with excellent credit.”
This doesn’t mean they won’t issue a card. Instead you’ll get a deal far less appealing
than the advertised offer. If you don’t review the details, you might be surprised to
learn the card you actually got carries a 30-percent APR instead of the zero percent you
were expecting. You can check your credit report free of charge once each year at AnnualCreditReport.com.
These are four of the primary factors you should bear in mind when you’re evaluating
credit card offers. Always take your time and read over every word of the proposition
very carefully before you submit an application. You should then read everything again
when the card arrives—before you use it—to be sure the deal you signed is the one
you’re getting. For more on this subject visit the Consumer Financial Protection Bureau
site at ConsumerFinance.Gov.
This is a collaborative guest post. The ideas and vision do not necessarily represent those of Mommy Ramblings.
