How To Get The Best Credit Cards
Following these seven guidelines will help you in your credit card shopping, and allow you to best get a credit card that works best for your particular income and lifestyle. These tips are especially helpful for those who have had past problems with debt. So, if you take a look at these steps and use them you will be on your way to building up your credit score again.
NOTE TO FIRST TIME CREDIT CARDHOLDERS: Getting a credit card will likely be the first step toward building your credit history and maximizing your credit score. As a result, you will want to make sure that you use your credit card responsibly, and these below guidelines will help you get the best credit card, with the best terms, that are able to acquire.
Here are the seven, mandatory, steps you should before getting a credit card:
1. Shop Around For The Best Deal
Not every consumer shops around before getting a credit card. This is a shame because shopping around for the best card can save you thousands of dollars. Also, It needs to be stressed, that shopping for the best deals for credit cards is also quite easy once you have done it a few times.
DO THIS FIRST- When thinking about getting a new credit card, first contact your current bank or Before you accept any credit card offers do anything else, start looking for a new credit card at your bank or credit union because your existing relationship may qualify you for a better offer. Next, compare the offers (you received with your local bank or credit cards) with other offers that you’ve received at home or have seen online.
And not shopping for the best deals on your credit cards can cost you:
You acquire a credit card with a $3,000 balance, and can only afford to pay $100 every month. If you have a credit card that charges an 18 percent annual percentage rate, or APR, you will pay $1,015 in interest and fees over the 41 months it would take to repay that debt. But if you had a card with a 15 percent APR, you would pay $783, and pay the debt off three months sooner.
In the above example, the higher interest rate card would cost you an extra $232, which may not seem that much. But, obviously, the $232 will be more if you have a larger credit card limit.
2. Decide How You Will Plan To Use Your Credit Card
Assuming you have already had a credit card, the best way for you to answer these questions below is to review your past credit card statements.
With each credit card statement, you need to just look at the summary of the interest and fees of what that you owed each month. Also, find out the amounts you’ve paid throughout the year on interest and other fees. The above information, on your credit statements, will allow you to discover and predict your credit card usage history.
The best practices are that unless extenuating circumstances have occurred, your past credit card usage history should be a valid predictor of how you will continue to use credit. So, if you have a history of late payments in the past, you can predict that with your new card you will have the same problems. The following are some examples of extenuating circumstance:1. Having to take out a large cash advance on your credit cards because of emergency car repairs. 2. You are late on credit card payment because of being laid off from you for a few weeks last year.
The above rule is not self-defeatist. However, following the above advice, is the best way to ensure that you will get the best credit card for your particular lifestyle.
To avoid interest charges, you may plan to pay off your credit card, balance every month. However, statistically, 60% of United States credit card holders will not pay off their credit card balances monthly.
After examining your past credit card statements, you will then be able to answer the below questions realistically.
- Will you pay off your card every month?
- Will you likely carry a balance each month on your credit card?
- Will you pay off your total balance for some months and not others?
Tip-Examine your credit card statements yearly too see if your credit card uses has changed. Subsequently, if your credit use history is better, you should consider getting a new credit card that may fit you better.
After honestly answering the above questions, you can then get a credit card based upon the below factors:
- BALANCE NOT PAID OFF-If you think you are not going to pay off your credit card each month, consider credit cards that have the lowest APRs. These cards typically do not offer rewards and do not charge an annual fee.
- BALANCE PAID OFF-If you have consistently paid off your balance every month, then you may want to focus more on fees and rewards. Compare the value of rewards you expect to receive (and use) each year with the annual fee you might pay.
3. Know Your Credit Limits For Your Card
Some credit card companies may offer a credit limit up to a specific dollar amount. However, you may not qualify for that maximum amount, which can result in your credit card limit being maxed out. Consequently, your credit score will lower once your credit limits have been maxed out on a credit card.
4. Know What To Compare With Different Credit Card Offers
Most credit card offers contain the following information that needs to be examined and compared:
- Annual Percentage Rate (“APR”)– Look out for credit card offers that list either several interest rates or an interesting range that you may be offered. With these credit cards, you won’t know what interest rate you will pay, until you get approved.
It should be noted that applying for credit can hurt your credit score. Therefore, before you apply for a card, ask yourself “If you will still want the credit card even at the higher advertised interest rates?
- APR for Credit Card Balance Transfers-If you are going to be transferring your balance from one credit card to another credit card, compare the interest rate you are paying on your current card with the rate you’ll pay over the life of the new card. Be sure to look at both the introductory interest rate and the interest charge after the introductory period has been finished.
Look For Any Penalty APR- With many credit cards, your interest rate will be increased, If you are late with your payments. So, find out what the increased rates are, what would cause increased interest, and how long will the increased interest rates last. If applicable, based upon your past credit history, decide on whether or not you want to take the risk of having to pay the increased penalty, APR.
Fees-Compare all fees for each card. Some of the fees to look for are annual fees, cash advance fees, and late-payment fees. Also, if you plan to transfer a credit balance, take a close look at balance-transfer costs.
5. When Zero Percent Interest Isn’t Really Zero Percent Interest
(Credit Card Balance Transfers)
Be wary of credit card, balance, transfer fees. The credit offer may state that they have a zero percent interest rate on balance transfers. However, the fine print may reveal that they will also charge you a one-time charge based upon a percentage of the balance that
It is best not to close your old credit card until you have a zero balance on that card. So, make at least the minimum payment while you’re waiting for the balance to transfer to the new card.
Do your best research before you accept a credit card. However, you may be able to change your mind, within ten days, if you have second thoughts about a balance transfer on your new credit card. (For example, you may have missed something in the fine print on your new credit card, which you don’t like.) So, if you have regrets, be sure to contact the credit card issuer as soon as possible if you think you’ve made a mistake transferring the balance.
6. Ask Your Current Credit Card Issuer To Match Or Beat Your New Offer
If you are happy with your old credit card, see if your old credit card issuer will match or beat the terms and rate on the new card you’re considering.
7. Find Out When Your Interest Rate May Rise
Under most circumstances (upon proper notification), your interest can go only up after a year. Also, interest rate increases can only apply to new charges. The exception to this is that you can be charged the higher interest rate on your old balance if you are more than 60 days late in paying your balance. There are a few exceptions, to this one year, interest rate increase rule, which are:
- You have a variable rate card that’s tied to an index and the index rises
- There is an introductory rate on your credit card (introductory rates must last at least six months)
- You are 60 days or more late on paying your bill
A low credit score can mean the difference between you being able to own your house, get a lower insurance premium, and even be hired for the job of your dreams. That is why raising your credit score is essential for even those that are “Credit Shy.” Don’t get me wrong; the above tips are an excellent resource for those with established credit and an acceptable credit score.
More importantly, though, even after suffering a financial setback, the above tips will enable you to be able to establish credit and maximize your credit scores. So, if you have suffered a financial setback, please realize that, with time and persistence, you can build up your credit score. Consequently, if you use these above seven tips, you will be able to get the best credit card for your particular situation, which can start your financial recovery.