If you've never had a credit card before, you probably already know that paying in cash or by check can be inconvenient in a variety of ways. Not only that but cash and checks can be lost or stolen, which means you could lose access to your money. If you've been postponing applying for a credit card but have decided to finally take the plunge, here's what you need to consider before choosing a card and filling out the application.
It is a good idea to check your credit score before applying for a credit card. Credit card companies typically have minimum credit score requirements, and a higher credit score may qualify you for a card with better terms, such as a lower interest rate or annual fee.
Make sure you understand the interest rate on the card and how it is calculated. A lower interest rate will mean lower finance charges if you carry a balance from month to month. Additionally, a fixed interest rate remains the same for the life of the credit card, while a variable interest rate can change based on market conditions, so be sure you know which type is being offered.
Look for a card with low or no annual fees, and try to find a card that has only a few other fees such as balance transfer fees or foreign transaction fees. Other types of fees include cash advance fees, over-limit fees, foreign transaction fees, and late payment fees.
If you are interested in earning rewards such as cashback, points, or miles, make sure the card you are considering offers a rewards program that aligns with your spending habits and goals.
Consider the credit limit you are comfortable with. A high credit limit may be tempting, but it could also lead to overspending.
Payment Due Date
Make sure you understand when your payment is due and how to make a payment. It is important to pay your bill on time to avoid late fees and to maintain a good credit score. It may be possible to negotiate a due date that aligns with your payday or another favorable date if the date given by the credit card company is inconvenient.
Terms and Conditions
Be sure to read and understand the terms and conditions of the credit card before you apply to get a thorough understanding of your rights and responsibilities as a cardholder.
Contact a company like Credit Union of Denver to learn more.