Maybe you’re looking for a new card that offers a 0% APR for a certain amount of time – a good way to move an existing high-interest credit card balance and pay it down or off completely with no finance charges. Or perhaps you want to earn miles so you can plan a much-needed vacation. Whatever type card you are considering, there are three important factors you should know before you apply:
1) Know and understand what you’re signing.
Every credit card comes with its own terms and conditions (the fine print). Make sure you know the fees, interest rates, and other important information before you apply:
APR: The annual percentage rate you receive will depend on your credit score. Generally, the higher your score- the lower the interest rate. If you know you’re going to carry a balance you want the lowest APR you can qualify for because it means you’ll pay less in interest charges. If you pay off your balance in full each month then the APR won’t affect you. Some cards offer a 0% introductory APR on purchases or balance transfers (or both) for varying amounts of time (usually 6-18 months).
Foreign transaction fees: If you frequently travel abroad make sure you choose a card which doesn’t charge these fees (which can run from 2%-4% on purchases).
Annual fee: Some credit cards have an annual fee that you’re charged upon opening your account and every year thereafter. Annual fees vary greatly. Many credit cards do not have an annual fee and some may waive the fee for the first year. But you will still be required to pay it the second year going forward. If you don’t want to pay this fee, be sure to find a card that doesn’t require it.
2) Only apply for a card that you are fairly sure you will qualify for. Your credit score will take a small hit when you apply for a new card so don’t apply for numerous cards that you have little or no chance of being approved for. Most credit card issuers will provide the minimum credit needed for approval- ranging from poor to excellent. Check your credit report and know what range you fall into. This is also an opportunity to verify that all the information contained in your report is accurate and up-to-date.
3) Choose a card that benefits your lifestyle. There are many credit cards to choose from. Look for one that rewards you for the things you buy most. Groceries? Gas? Dining out? Travel? Pick a card that matches your spending habits. There’s not much point in having a rewards card if you can’t maximize the benefits.