If you are anything like me then you probably receive a couple handfuls of credit card offers in the mail. All of them are packed with a credit card offer ranging from cash back opportunities to enough airline miles for a free trip anywhere. But how do you know what is really a good deal?
The next time you receive a credit card application in the mail make sure you know what to look for so you fully understand what you are signing up for. Here are the top things to know when you’re reading a credit card offer.
Most people use credit cards because of the access to available credit. That mindset is what leads to massive amounts of credit card debt. Instead you should use a credit card because of the rewards that it provides. When you receive a credit card offer for a reward credit card, it’s important to look at a few things.
The sign-up bonus – Do some research into what kinds of offers other people have received the same card. Is your offer similar to those? If not, then it might be best to wait until a better offer comes around.
The minimum spend – How much are you required to spend before you will actually receive the bonus? If it’s more than you feel comfortable spending then it probably isn’t a good idea for you to get the card.
Bonus points for category spend – Does the card offer bonus points when you make purchase in different categories like gas, groceries, or travel? If it does then these are great cards to keep in your wallet.
Understand what the interest rate will be
Just because a credit card might be offering an incredible sign-up bonus doesn’t mean it’s the card for you. Ideally, you will never be carrying a balance on your card. However, it’s important to understand what interest rate you will be charged if you let a balance rack up.
When you get the credit card offer in the mail make sure you take a look at the Schumer Box. This is the first item in the terms. The Schumer Box was spearheaded by Sen. Charles Schumer as a way to make credit card interest rates clear to consumers. The Schumer box will explain all the different interest rates that could affect you. These include, promotional rates, standard rates and even the penalty rates.
Pay attention to the fees
If you are looking to apply for a rewards credit card your first year then you might find out some never charge annual fees. Most other reward cards will have $0 annual fee the first year and then it will begin charging a fee every year after. Also, be aware of any fees that you might be charged if you pay your bill late or even use your card outside of the United States. If you do a lot of foreign traveling then it’s probably best that you have a card with no foreign transaction fees. If you are planning to transfer a balance from another card, pay close attention to whether or not the new card will be charging you a fee to make that transfer.
Wrapping it up
When looking to apply for a new credit card there are a lot of factors that you need to consider. The best practice is to make an educated decision. Don’t just look at the reward that you might receive. Pay close attention to what your interest rate might be and any fees that you could be charged.