Steps to Take When Choosing a Credit Card
The other day I was going through my mail and I realized that over 50% of it was credit card applications. Now this is nothing new because ever since I was in college I have been getting piles of applications every month. I do have to admit though I do usually open them all up and look at what they have to offer. I might get annoyed with them but I am always going to be open minded to a good deal.
One of the many websites that I like to frequent is a site called Dumb Little Man and they wrote an article a while back on the top things to look at when choosing a credit card.
1. The first and most important thing to me when I look at credit card offers is does it have an annual fee. If it has an annual fee than I automatically discard it. You will need to run the numbers to see if the amount of reward you will get will still put you ahead if you have to pay an annual fee. If not than what’s the point.
2. The second thing I look at is what is the variable interest rate after the promotional period is over. This must be within a percentage point or two for me to even consider it.
3. The next think to look at is what is the balance transfer fee on the prospective card. Well most cards will have this you just need to make sure it is inline with the industry average which is around 3% with a cap around $75. If it is not around 3% than get ride of the application and keep looking.
4. Do you have a tendency to miss a payment? Well first off you shouldn’t be doing that but if you do than you need to know what the penalty is going to be. Some cards will bump than nice low rate up to over 30%.
5. The very last thing you need to consider when opening up a new credit card is do you really need it and is this going to help you out financially in the long run. Myself for example, I use my credit card all the time to get points for airline tickets. I pay my credit card down the end of each month so that I do not accrue a high finance charge. If I were to find a card with a better rewards program but a little higher rate than my current 7.9% than I would do it because the long term value would be there for me.
So what is most important to you when picking a credit card?