Finding the Best Credit Card Application
Bryan Dufresno
Comparing credit card offers can be a nightmare task if you are unfamiliar with all of the options and fine print that goes with each credit card application. Typically, all card offers now have some form of extra or bonus to entice you to select their card. What they don't tell you up front is that many of these "bonuses" also contain hidden conditions that can get you into hot water if you are not careful during the selection process.
Do you plan on carrying a balance? - Generally cards that offer reward incentives carry a higher APR, if you don't plan on carrying a balance then this does not affect you. Also many of the rewards programs have restrictions on them when you miss a payment or when your account is not in good standing.
Where are you going to make the majority of your purchases? - What do you use your credit card for? Is it general retail spending? Do you travel a lot? Depending on your spending habits it may be beneficial to hold multiple cards, one for travel and one for general spending.
Are you adding a card to your portfolio or replacing one? - If you are looking to replace a card you currently have, you want to ensure that the new card allows balance transfers; you will also want to investigate the fees associated. Many cards offer a zero interest introductory rate on balance transfers. Some offer zero interest until the balance is paid off - a very attractive incentive if you are transferring a large sum.
Rewards -- Friend or Foe
There are so many combinations of rewards that it is beyond the scope of this article to investigate them all, but typically cards fall under one of 3 main types; air miles, cash back or retail points.
Airmiles - reward program that has discounted airfares and ultimately the potential for free air travel by using your credit card to make purchases
These cards are great if you are a person who does a lot of air travel and already have a favorite airline chosen. But beware, cards in this category typically have a large annual fee associated with them reducing the benefits you receive from the card unless you are someone who uses the card often.
If you are a person who uses your credit card a lot and pay your credit card bill in full each month then this type of credit card may be worth applying for.
Retail Points - earn "points" which can be redeemed on purchases at selected merchants
Retail points reward programs may be the most popular and widespread of the reward programs available. Seemingly every retail outlet you can think of has their own credit card offer with a points system which allows you to save money on purchases by redeeming the points for goods at the retail outlet.
Retail credit card offers are tailor made for people who do a lot of shopping at a particular store. If you have a store you frequently shop at, make sure to see if they have one of these credit card offers which can help you save money when you shop there. Just be sure to pay your balance each month or you will lose the value of your points because you will be paying interest on this balance.
Cash Back - receive up to 5% of your purchase back in cash when using your card for purchases
Cash back rates vary by card offer but in general you will see rates of 1 - 2% and all the way up to 5% is possible to find. Remember to pay your bill each month since you don't want to use your cash back money to pay interest charges on the balance you carry.
There are also more specific rebate cards for gas, hotel, auto, etcThis is and excellent way to track and control spending while receiving a rebate on frequently purchased products or services
The best way to make sure that these credit card offers are a benefit and not a burden is to police your spending habits vigourously. Paying your bill at the end of each payment period ensures you receive the full benefit of the incentives your card issuer is promising you. It's not very good to have a 1% cash back card where you carry a balance each month that has an interest rate higher than 1%. You would lose money then which is not a "benefit".
Bryan is a financial expert and can assist you with choosing the right
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