If you have decent credit, chances are that you have been getting offers to open credit cards in your mail on a regular basis. Credit card companies are always interested in signing up new card holders with good credit and will take every opportunity to entice you into signing up for their cards. Accepting these offers can do more harm than good if you make a bad choice when choosing a credit card. Here are some questions that you should ask yourself before signing up for a new credit card.
Do I Actually Need The Credit Card?
The first question that you should be asking yourself is if you actually need the credit card. Too many people sign up for credit cards that they do not need, causing themselves all sorts of financial issues in the future. Having credit cards that are unnecessary increases your chances of becoming a victim of identity theft and can get you in deep trouble in the event of a financial disruption, such as loss of a job or an extended illness. Because credit cards generally have the highest interest rate of any financial products, outside of payday loans, running up unnecessary debt on an unnecessary credit card can keep you in debt for decades. Consider signing up for all-purpose credit cards carefully and avoid signing up for store-based credit cards that can only be used at a single retailer.
Does The Credit Card Complement My Financial Needs?
There are literally hundreds of different credit cards to choose from and each of these credit cards have their own features that make them fit with your financial needs well or poorly. It is important to choose a credit card that complements your financial needs to get the most out of your use of the credit card. If you are someone that travels frequently, you will want to find a credit card that rewards you with airline miles that you can use for discounted flights in the future. If you primarily use your credit card to make everyday purchases that you pay off at the end of the month, then you will want to find a credit card that gives you cash back on your regular purchases.
How Much Will I Be Paying In Interest?
Before deciding to sign up for a credit card, you should know the card’s APR, or annual percentage rate of interest. This is the interest rate you will be paying for placing a balance on the credit card. Cards that have lower APRs will cost you less in interest if you carry a balance from month to month. You should also ensure that the rate you are looking at is not just an introductory rate that will increased substantially at a later date. You should also review the actions that could trigger a higher interest rate, including using the credit card to obtain a cash advance or missing a payment.