Credit cards are powerful tools to have in your purse or wallet when used wisely. But if you pick the wrong card or use it incorrectly, it can add to your debt and lower your credit score. Before you fill out that credit card application, ask yourself these essential questions.
1. Do I Need This Card?
Before you get a credit card, determine if you really need it. Having another card might cause you to overextend yourself and add to your debt load. Look into the cards you already have. You might have adequate credit available to meet your needs, so why apply for another?
2. Will I Qualify for a New Card?
Some of the most important factors lenders consider when borrowers apply for credit cards are employment status, ability to pay and credit scores. If you don’t have a stable, fixed income, you might need a cosigner. If you have high monthly bills, you might not be able to pay an additional one on time. You might have to reduce your monthly payments to qualify. If your credit score isn’t high enough or this is your first credit card, you might want to consider getting a secured credit card.
3. What’s the Best Card to Meet My Needs?
Many types of credit cards are available, so take the time to review the credit card offers you receive. Cash back credit cards are good if you prefer monetary rewards. If you travel frequently, travel credit cards might be a better fit. Some rewards cards focus on specific purchases such as automotive, entertainment or groceries, and they give higher rewards for those categories. Match your card to your purchasing habits for the best deal.
4. What Are the Rewards and Conditions?
If a reward card is the best credit card for you, find out what the conditions are to earn those rewards. Consider whether the rewards can be taken away if you make late payments or if you have to meet a certain quota to receive them that is out of your reach. If meeting conditions for the rewards is difficult for you, you might not benefit from such a card. Choose a rewards card that will work for you.
5. Are There Other Credit Options?
If you need money for a single purpose such as home repair, a personal loan might serve your needs better. You might secure a better interest rate and a more manageable monthly payment for a major purchase. Another option to secure a lower interest rate might be a home equity line of credit. If you have equity in a home, this can be a great way to borrow money.
6. What Is the Interest Rate?
One of the most important factors, when you’re considering credit card services, is the annual percentage rate. The APR determines the finance charges you’ll pay on your balance. You might find a credit card that offers a low or zero percent APR for the first year, but look beyond that to how much purchases will cost you over the long run. The lower the APR is, the better it will be for you.
7. Are There Credit Card Fees?
Consider credit card fees as part of the total cost of the card. If there’s an annual fee, find out how much it costs. If paying the fee earns you a break on APR, it might be worth it. Take time to determine what happens if you miss a payment. Find out the cost of late fees, and if late payments could lead to an increase in APR. These are important questions to consider in calculating the total cost of the card.
8. Does the Card Provide Good Fraud Protection?
Fraud protection is important in this day and age. The best credit cards providers monitor transactions to stop potential fraud and make it easy to dispute fraudulent charges. Get answers to these questions when choosing the right card for you.
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Having answers to these eight essential questions will help you to make the best decision for your credit needs. When you decide if a credit card is what you need and which one is best for you, you can apply for a credit card online to receive a quick reply, or visit the bank of your choice for other options.