Aside from checking your credit report and learning more about your credit profile, there are a few things you should do when shopping for a credit card to ensure you get the best deal possible and the best card to suit your needs and lifestyle.
Ask Questions First
Before applying for a credit card, there are many questions you should ask and have answered. This way, you are clear on what you are getting yourself into with the credit card. This also helps you to comparison shop to make sure the card you choose to apply for is truly the right one for you.
Whether you receive a mail solicitation or discover the credit card on the Internet, you should search for answers to the following questions:
- Does the card have an application fee, an annual fee, or processing fees?
- What are the rules and fees regarding late payments and going over-the-limit?
- Does the company provide notification when I am close to going over my limit?
- Besides fees, are there any other repercussions for going over the limit?
- What additional fees does the card have? (i.e. balance transfer fees, cash advance fees, and account termination fees)
- How long does the introductory offer last?
- What will the APR be on the credit card after the 0% APR introductory offer is over?
- If the card has a variable APR, what can cause the APR to change and how often can it be changed?
- If the card has a fixed APR, what circumstances can cause a change in the rate?
- How are changes to the credit card contract communicated to cardholders?
- How long is the grace period before the balance is charged interest?
- How does the credit card company assist me if I have difficulty paying my bill on time?
If you cannot find the answers to these questions within the paperwork you have received or online, call a company representative to find the answers. You might also request to have the information sent to you in writing so you can verify the answers and have it on hand should a dispute arise in the future.
Go for a Low, Fixed Rate
Experts are in agreement that a credit card with a low, fixed rate is a better option than one with a low, variable rate. Although the rate can still be increased with low fixed rate credit cards, the company must provide you with fifteen days notice. Variable rate credit cards, on the other hand, can be changed without notice and at any time.
Consider More than the APR
If you plan to carry a balance on your credit card each month, the APR is definitely an important factor to consider when selecting a credit card. It should not, however, be the only aspect of the credit card that you look at. First of all, you need to consider how the APR is determined. If you will be carrying a balance, avoid those that use the two-cycle average balance method. Instead, choose a card that uses the average daily balance method your checking account will thank you.
You should also consider other options that may or may not be included with the card. Popular options include purchase protection, which provides you with insurance for purchases made with the card, and travel and auto rental insurance. You might also get options such as cash rebates for specific purchases, discounts on services and goods, and warranty coverage for certain products. Some also provide you with frequent flyer miles. Depending on your spending habits and lifestyle, these perks may be more important than obtaining the card with the lowest APR.