Did you know the average person in the US has a personal debt amounting to $38,000?
If you’re in a personal crisis, you might need to get a personal loan. It isn’t that difficult since most lenders in the industry are reputable. This isn’t the same when you apply for credit card.
When you’re picking a credit card, you need to ask yourself some questions. This can help affect your choice of credit card provider.
Before taking out any credit, you want to make sure you understand how it works. Here are 10 important things to ask before you apply for a credit card.
1. Why Am I Applying?
When you apply for a new credit card, this is the first question you need to ask. Your reasons can vary-maybe they offer low or no interest fees for the cards. It can also offer some sort of rewards program that fits your spending habits.
The interest rate doesn’t matter if you pay the balance off on a monthly basis. Otherwise, you might want to opt for the card with the lowest rate. It’s still a good decision even when it comes with a yearly fee.
2. Will I be Approved?
You should not go out and apply for every card out there. Each time you apply for credit the credit card issuer will check your credit to make sure your fico score meets their minimum requirements.
You can get pre-qualified for a credit card without affecting your credit. Pre-qualified is when a creditor looks at a very basic picture of your credit profile to determine which cards you may qualify for. When you get credit card offers in the mail that say you’re pre-qualified, you can apply to those.
Once you’re pre-qualified you can take the next step which is to get pre-approved for a credit card.
3. Is my Credit Score Good Enough
When Your credit score not only determines if you qualify, but the interest rate you receive will be based on your score. Before applying for a credit card you should work on improving your credit rating.
Here are some ways you can raise your score quickly
- Pay down credit balances on any other credit cards you have
- Do not apply for any credit or loans without knowing you will be approved
- Stay current on all of your payments
- Negotiate with collection agencies to have collection accounts removed if you pay them
Best Credit Cards for Bad Credit
Credit One Bank® Unsecured Platinum Visa®
An easy and convenient way to start rebuilding your credit. The Credit One Bank® Unsecured Platinum Visa®. There is an annual fee of up to $99.
Lot’s of great features such as cash back rewards, free credit score updates, and text notifications of payments.
First PREMIER® Bank Credit Card
The First Premier card for bad credit borrowers offer a chance for you to rebuild your credit history with this insecure revolving credit card.
Payments are reported to all three major credit bureaus each month to help you build positive credit history.
If your credit score is too low to qualify, you can get a secured credit card to help you build your credit.
4. How Does this Card Compare to Other Choices?
When shopping for a card, you need to compare it to other similar credit cards. Look at the basic information like the APR as well as the sign-up bonuses. Check whether the rewards program is worth your spending.
Consider the other perks the card offers. You might see some that offer car rental insurance or airport lounge access. That’s why it’s important to check each card’s benefits to pick one that suits your needs the most.
5. What Kind of Credit Line Do I Need?
If you spend a lot for your needs, you might need a card with high limits. One of the benefits of having these cards is the possible rewards you earn by spending. If you have an excellent credit score, you can get the cards with major buying capabilities.
Your credit line depends on the card. Some offer a fixed account or a possible limit range like $200-$2,000. The better your credit score, the higher the credit limit you can get.
6. What’s the Regular APR?
The CARD Act of 2009 gives guidelines to credit card companies. It says that an introductory period for lower interest should last at least six months. It might be an appealing factor to start choosing a card, but the regular rate is something you should look into.
Find out what the rate is after the introductory offer expires. This information is often in the card’s terms and conditions. If you’re confused, you can always ask a representative from the company.
7. Does the Card have Cash Rewards?
You need to ask this question if you want to get cards for its points or rewards. Some of your issuers might revoke rewards in certain situations. Some might even do it if you don’t pay in a timely manner.
Most will say that they have the means of taking away or reducing your rewards. It’s true, but you can always ask their policy on the conditions. Knowing this can help you choose the card that works for you.
8. Can They Use Anything I Charge Against Me?
Some card issuers might use your purchase records. That helps in checking whether you’re still good with your creditworthiness. If they do, it might not be an ideal choice for your needs.
That means your purchasing history will determine whether your APR climbs and your credit limit decreases. You might want to stay away from these providers if you see it as an invasion of your privacy.
9. Can I Get Off the Hook as a Co-signer?
It’s a good question to ask if you’re co-signing for another person. For example, if you’re guaranteeing a card account for a college student, you need to ask this question. It’s important since you might still share responsibility after they turn into a legal age.
10. What are the Protection Policies for Card Fraud?
Most Federal laws put a $50 limit on your liability for unauthorized credit card charges. Most issuers will cap your losses at $0 as long as you follow their rules. That’s why it’s good to investigate how your card handles charges you didn’t make.
Check the issuer’s prevention programs for fraud and identity theft. They should track your card usage and shut it down if it detects uncharacteristic charges. It should also start freezing up if used in strange locations.
11. How Will They Treat Me if I Fall Behind?
This might seem counterproductive when applying for a credit card. Ask detailed questions on how your issuers respond if you start experiencing financial troubles. Always make sure that you get specific answers to get a clear idea.
Check how they handle your card benefits if you start missing payments. Check their terms and understand how you’re penalized for the card. Know the late fees or the penalty rates applied to your card.
12. Can My Credit Card History Affect My Credit Card Application?
This is important since the short, hard answer is yes. Always remember that your choice of credit card gets limited by your credit history.
The main reason is the fact that issuers run credit checks before they approve your application. Each time you apply for another loan, even if it’s from a different lender, they’ll conduct a background check. This lets them see what kind of credit cards you have, how many you have, and how you’ve used them.
This helps determine whether you make timely payments. They’ll know if your income is stable enough for a credit card. Issuers also check if you still have some remaining debt and make sure you qualify.
Apply for Credit Card Today!
When it comes to flexibility and perks, you get a lot when you apply for credit card. But always remember that you’re exposed to risks.
If you don’t want your card to cost you more than it should, ask these questions to avoid getting into financial troubles.
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