Tips for selecting a new credit card
Posted on January 25, 2008
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Don’t apply for multiple cards at one time. Creditors are wary of multiple applications, and several applications can decrease your credit score. Apply for one or two, and if you don’t like the card once you receive it, then cancel it. If you were turned down, or received a higher rate or lower limit than expected, get a copy of your credit report to see whether there are issues that need to be corrected.
Low interest. This is the only choice if you carry a balance. The lower the interest payment, the more you can pay off your balance and the faster you will eliminate credit card debt. Avoid low-interest cards that charge an annual fee.
The low advertised interest rate is not the rate automatically offered to each applicant. Before starting a card search, look at your credit report and get your credit score. Many credit cards offer tiered rates based on credit scores. If it is higher than 760 (FICO), expect to qualify for one of the lowest interest rates. If your score is less than 680, expect one of the highest rates.
Look for a card with a low or no annual fee. This is the fee that the credit card company will charge every year just for issuing the card. You are obligated to pay the fee even if you don’t use the card. A card with no annual fee and low interest is ideal.
Learn about the credit card’s default interest rate. This is the interest rate charged as a penalty if you make a late payment or pay less than the minimum payment required. Your interest rate could double or triple. This higher interest rate will apply to the existing balance and future purchases with the card.
Understand the credit card company’s “change of terms” policy. Many credit card companies reserve the right to change the terms of a credit card contract at any time for any reason.
Source: Consumers Union