How To Evaluate a Credit Card Offer – Knowing how to evaluate a credit card offer is important before you make a final decision of owning one. This is very important, so as not to shoot yourself in the leg by picking a card that will end up compounding your problems instead of decreasing them.
Choosing the right card for you is largely dependent on what you can afford, your lifestyle your preferences, your needs and budget.
We have outlined some of the factors you must take into consideration before picking a credit card.
Interest Rate
The interest rate of any credit card offer appears as the APR, or Annual Percentage Rate. This can be either a fixed or variable rate that is linked to another financial indicator, mostly the prime rate.
If the card you intend to get is a fixed-rate card, then you should know that the interest rate will be from month to month while a card with a variable rate fluctuates.
Note also, that even a card with a fixed-rate can change depending on certain triggers, like paying your card – or any card – late, exceeding your limit, or because the card issuer deems it fit to change it. Note, if the change is from the card issuer, you will be notified.
Card Usage
You have to ascertain how you are going to use the card. By this we mean, will you be using the card for emergency expenses, or for everyday purchases? If this is what you want the card for, you may be better off with a general credit card with rotating credit card rewards categories. If you intend to use the card primarily for travel, then go for a card with generous travel perks and rewards.
Credit Limit
Another key factor to consider is the credit limit. By, this, we mean the amount of money that you are allowed to borrow by the credit card issuer. This may be determined by your credit history, which could range from anything of a few hundred dollars to tens of thousands of dollars.
Why this factor is essential, is to help you guard against maxing out your credit limit, which can have a negative impact on your credit score.
Terms and Conditions
Before you sign up, review the terms and conditions to ensure it suits you. Key terms to read over includes, when does the APR apply, what are the fees for late payments, cash advance etc.
Method of Balance Computation
Knowing how the finance charge is calculated is very essential if you will be carrying a balance. The common method known is the average daily balance. What this means is, the daily balances are added together and then divided by the number of days in the billing cycle.
Avoid as much as you can credit cards that compute the balance using two billing cycles, as this will only end up costing you more money in financing fees.
Avoid Scam
Boycott credit cards that are unsecured but available “no matter the credit”. Usually, these programs would require you to purchase overpriced merchandise from their catalog just to “build credit”. Avoid cards that the offers are too good to be true, offering you easy credit, lowered rates, no fees or high credit.
Do a Card Review Once a Year
Check to ensure, that the cards you are carrying is still the ideal card for you. If you are getting charged for annual fees you do not want to pay or you are earning benefits and rewards that are no longer valuable to you, you might want to opt for card with more usable benefits and lesser fees.
You can also reach an agreement with the credit card issuer to see if the annual fee can be lowered or waived entirely.
With this cue, you can now make an informed choice on the credit card that best suits you.
