Applying for a credit card can be a good idea if you are looking to make a big purchase or need funds in an emergency. However, there are many credit cards on the market, and not all of them may meet your needs. How do you determine which credit card offer is right for you?
What Do You Need Most From Your Card?
The first question that you should ask when evaluating a credit card offer is what you need a credit card for. If you want to lower your interest rate, any offer that you accept should include no interest on all balance transfers. If you are looking to make a big purchase and pay it off over time, you should look for a card that has no interest on new purchases.
What Is the Long-Term Interest Rate on the Card?
While you may be tempted to get a new credit card because it offers no interest for 18 or 21 months, that rate will eventually expire. Therefore, it is important to look at how much interest you could be charged if you use the card two years, three years or five years from now. If you have good credit, you shouldn’t have to pay an interest rate higher than 12 or 15 percent.
Is There an Annual Fee or Penalty Rate?
Those who have good credit shouldn’t bother with any card that has an annual fee. The same is true for any card that has a penalty rate or charges a fee for late payments. However, it may be possible to have the annual fee waived by asking the credit card provider to do so. It may also be possible to have late fees or penalty rates waived once you establish a track record with that provider.
Are There Any Perks Associated With the Card?
Any perks that you get by using a credit card could actually help you save money in the long run. For instance, if you get cash back, you may want to put a purchase on your card as you could effectively save 1 or 2 percent on the retail price. However, this assumes that you were going to pay for the item with cash. It also assumes that you were going to pay the balance in full by the end of the introductory period.
Just because you receive a credit card offer in the mail or see one advertised online doesn’t mean that you should accept it. Instead, you should critically evaluate whether you need credit, whether that card meshes with your financial goals and whether you will be able to pay off any balances that you accumulate in a timely manner.