What To Consider Before Applying For A Credit Card
If you are looking to open a new credit card you never have to look very far - you probably have a few applications in your mailbox right now. But when you are looking for a new card what kind of things should you look for?
Credit cards are very simple in concept but can quickly become complex when you factor in all the bells and whistles that credit card companies pile on.
Before you apply for anything take a look at a few of the key factors laid out in the fine print to know which one is right for your lifestyle and financial circumstances.
Start With A Secured Card (If You Need To)
If you have poor or no credit you may find that opening a credit card is difficult. Instead of striking out you will have a lot more luck applying for a secured card first.
How secured credit cards work is that you put down a security deposit first and are issued a line of credit. This allows you to build up good credit even with the lowest of scores. When considering this option make sure you find a card where the bank reports to the credit bureaus so your good habits are documented.
Like all credit cards, look for low interest and fees and that you have the opportunity to graduate that account to an unsecured card in the future. Being able to upgrade your account is essential - you get your deposit back while keeping the same line of credit on your report (the longer the line is established, the better).
Look For A Reasonable Grace Period
A grace period is from when the credit card company issues your bill to when the payment is due. If you make the full payment in that period you will avoid an interest charge. When looking at cards it is best to find one with an average grace period of 20-25 days (or more). Don't settle for one with no grace period if interest is something that you have struggled with.
Find One With Little To No Fees
No one likes to pay fees. So when you are looking to apply for a new credit card, find one that doesn’t have a ton of fees attached, especially an annual fee. Annual fees are very avoidable but if you find a card that feels like a great fit and has an annual feel that you are comfortable with then go ahead.
Also look at fees associated with transferring balances and making late payments. If you do either of those things you will want to be extra cautious in those areas. If there are more fees that is a red flag. Many predatory companies target people with poor credit and overwhelm them with fees burying them in debt. There will always be some fees but there shouldn’t be a million!