Credit cards are very useful, but they are also a long term commitment that can get you into a lot of financial trouble if you jump into owning one haphazardly. Knowing what you’re getting into can save you a lot of money and prevent a great deal of headaches. Here are some of the most important things to think about before getting a credit card.
The Different Types of Credit Cards
If your credit rating is good enough, there are countless different types of credit cards that you can choose from. Each of these credit cards provides different types of advantages depending on what your spending habits are. Reward and cash back credit cards can give you monetary incentives to use your credit card. Sometimes these bonuses are increased for various types of expenses. There are also balance transfer cards that can help you mitigate debt that you’ve accumulated on other cards. Some cards may also give you frequent flier miles or other travel bonuses. If you are getting a rewards card of some type, be sure to estimate your annual expenses on different kinds of purchases to determine which will be the most beneficial for you.
Interest Rates
Be sure to know what kind of interest rate you’re looking at when you get a new credit card. Although you’re probably not planning on accumulating credit card debt, anything can happen. Rates can vary greatly and are typically determined by your credit score. Many cards offer 0% introductory rates, but these rates will eventually increase to a normal rate. Be sure that you’re aware of when the rate will go up as well as how high it will go.
Shop Around
The credit card market is extremely competitive. Many credit card companies offer various cards that are similar to their competitors. If you find a deal that you like, see which other companies offer similar cards and find out what kind of rate you will be able to get. By knowing all of your options, you will be able to find the lowest interest rate that is possible with your current credit score.
Read the Fine Print
Although credit card companies aren’t looking deceive you, it is very likely that important information may be missed if you do not fully read all of the terms in your contract. Know exactly what your credit limit is, what your APR is and how your interest will be calculated. If you are getting a rewards card, know what the limitations are on those rewards. You should also check if there are any annual or monthly fees associated with the credit card that you are getting.
Getting a credit card is a major commitment that has the potential to either improve or destroy your financial well-being. Such a commitment is not to be taken lightly. Be sure to research everything about the credit cards you are thinking about getting. If you are an educated consumer, you will be able to find yourself a great deal and save a lot of money.
