If you are in the market for a new credit card, there are a number of things you want to consider. You do not want to apply for the first card that catches your eye, as different credit cards are designed for different people. You will want to make sure any potential card has all of the benefits that you want without any negative features, such as a high interest rate. If you make the wrong choice, you could be stuck with a card you don’t want, so make sure to research all options so you make an informed decision.
APR
A credit card’s APR is probably the most important factor to consider. APR, or annual percentage rate, is the interest rate you will pay for charges made on your card. An APR can be fixed or variable, which is something you will want to consider. Variable rates can change at any time, sometimes significantly, which can increase your debt. With fixed rate cards, your interest rate will not change, so you will know exactly what you will be charged each month.
Generally, people with better credit histories and higher credit scores will be approved for credit cards with lower interest rates, but those with lower scores will only have access to cards with higher interest rates. You will want to make sure your credit card offers an APR that is fair, given your credit score.
If you pay your balance in full every month, it may seem as if you will not have to worry about the interest rate. However, there is always a chance you will carry a balance for a period of time, so every cardholder should consider APR.
Annual Fees
Many consumers assume all credit cards have annual fees, but this is not the case. In fact, most cards do not charge annual fees. For those that do, many will waive the annual fee for the first year you are a cardmember. Do your homework but know that most cards with high annual fees are not worth it.
Hidden Fees
Just like any other business, credit card companies are trying to make money. They do this in a number of ways, including cash advances, balance transfer and transaction fees. You may also be charged for going over your limit or making a late payment. To know what fees you could be charged, make sure you research the terms and conditions when you sign up for a card. Know in advance that credit card companies will not give you this information in bold print. Rather, you will have to read the fine print of the credit card agreement, which is usually available online. Avoid cards with outrageous hidden fees or high late fees.
Rewards and Benefits
Many card issuers will offer rewards and benefits as a way to attract customers. There are many types of rewards programs, such as airline miles and cash back. If you have a good credit score, you can search for rewards programs that meet your needs. However, if you have a low score, your options may be limited. Know that you can always increase your credit score, which will make you eligible for a better card.
Rewards are great, but only if you pay off your balance each month. Otherwise, the amount you pay in interest will undermine the rewards you earn. You will also want to make sure the rewards are something you will actually use.
Credit Limit
When you apply for a card, your credit card issuer will give you a credit limit, which is the amount of money you will be able to borrow. The amount of credit extended will depend on your credit history and score. Before you apply for a card, you will want to consider what sort of charges you will make on a regular basis so you know what credit limit you need.
Before applying for a credit card, there are a number of variables you will want to consider. The interest rate should be a top consideration, but you will also want to know all hidden or late fees. Make sure to find a card that offers a credit limit you can use and gives rewards that will help you make money. It is very important to choose a card that meets your financial needs.