What to Know When Applying for Credit Cards

Most of the world today wants to apply for a credit card(s) or people continuously get offers from credit card companies.

Because of this, we think it is important to always do your research and think about things before applying for these credit cards.

What to Know When Applying for Credit Cards

1. Spending Habits

The first question to be answered is how you intend to use the card.

Are you the kind of person who will pay off the card every month without fail, or do you anticipate carrying a balance from month to month?

Are you going to use it to pay for everything, or just for emergencies?

2.The Interest Rate

It can either be a fixed rate or a variable rate.

With a fixed-rate card, you know what the interest rate will be from month to month. A card with a variable rate can fluctuate. However, even a card with a fixed interest rate can change based on certain triggers, such as paying late, going over your limit, or because the credit card issuer decides to change it.

Typically, if you have a good credit score (700 or above), you can negotiate your interest rate to be better than what the issuer offers. don’t just accept any interest rate, especially if you worked hard to have good credit.

3. Credit Limit

Depending on your credit history, it could be anything from a few hundred dollars to tens of thousands of dollars. You don’t want a situation in which you’re close to maxing out your credit limit. It can hurt your credit score, and some credit card issuers have cut customers’ credit limits to an amount that’s lower than their current balance.

4. Fees and Penalties

Credit card issuers always make money off of you.

Common ways come from balance transfers and cash advances or you asking to increase your credit limit or make a payment by phone.

There are also penalty charges for paying your bill late or going over your credit limit.

Look for cards with reasonable fees.

On balance transfers, for instance, look for offers with no transaction fees and 0 percent interest for at least 12 months.

And don’t pay extra for rewards programs.

There are plenty of card issuers who don’t charge extra for them.

5. Balance Computation Method

If you’re going to carry a balance, you need to consider how the finance charge is calculated.

The most common method is the average daily balance, which means that the daily balances are added together and then divided by the number of days in the billing cycle.

Stay away from credit cards that compute the balance using two billing cycles because this costs you more money in financing fees.

6. Incentives

Many card issuers offer reward programs to their customers to induce them to use the card.

Assuming you’re going to make the purchases anyway and the card issuer doesn’t charge extra for the rewards program, it can be a nice benefit.

Look for a program that offers flexibility, such as cash or travel, and rewards that you’ll actually use and that are easily earned and redeemed.

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