How to Properly Compare Two Different Credit Card Offers
When we all sign up for that very first credit card at age 18, it can be a pretty big deal. You suddenly find yourself armed with spending power that for many teens, is more then they have ever had before. But what most people don’t realize is, you’ve now opened yourself up to a lifetime of receiving credit card offers. Once you begin to establish your credit, you are announcing to the credit world: here I am! And the credit card companies are sure to let you know that they hear you. But how can you tell which credit card offer is right for you? There are many different things you need to take into consideration. Let’s take a closer look at this problem.
The first thing you need to look at is your financial situation. You are going to receive credit card offers on a weekly basis from your teen years until the day you die (and sometimes after) and the card companies can’t always tell what is going on in your life, money-wise. If you are in your mid-30’s and you are climbing the corporate ladder and you find yourself with more disposable income than you’ve ever had before, you can get away with having a credit card that has a much higher credit limit and even a higher interest rate than someone who just graduated university and is still working at the mall. The first important tip when it comes to getting a credit card is to make sure it is within your means. Even if you are responsible and you would never run up your card if you couldn’t afford to pay it off right away, situations change and it is best not to tempt fate.
The next thing you need to take into consideration is if you are in a situation where you can take advantage of perks. Credit cards come with hundreds of different kinds of rewards that you can earn as you use your card, but often times, these rewards come with an annual fee and sometimes other fees, too. If you just started your own small business and you need a reliable business credit card, getting one with air miles is a great idea since you’ll be likely spending tens of thousands of dollars on it. If you are recovering from bankruptcy and just trying to rebuild your credit, you would be better off with just a regular card with no fees since rebuilding your credit should be your top priority.
Finally, if you are applying for a card to transfer balances and consolidate your debt, make sure you use a card that has a low, permanent interest rate and not an introductory rate that expires after only a few months. Many card offers are intentionally deceptive about how long their introductory rate is and you have to try to find the disclosure statement, usually located on the back of the actual credit card application form. The best thing to do is to collect a few weeks worth of offers, compare them side by side and take the one that has the least amount of fees, the lowest permanent interest rate and the best rate for new purchases. If you can control yourself, take the offer that has a low, fixed rate on transfers but a high rate on new purchases. Just make sure to never use the card to buy anything new.