Looking for ways to effectively analyze credit card offers? This post details some of the ways that potential credit card applicants can use to help them dissect and choose the credit cards that best fit them.
From time to time, I get credit card offers in the mail (actually, a lot of them). To tell you the truth, I sometimes get tempted to apply for these credit cards. How can I not be tempted? These cards offer cash back, bonuses or incentives in the form of money and gifts, no interest charges for 12 months, and so on. I am tempted because I know I can take advantage of what these credit cards have to offer.
According to Nerdwallet.com, the average total owed by the average U.S. household in credit card was $15,355. This figure was based on the 2015 American Household Credit Card Debt Study.
The truth is, credit cards can be your best friend or your worst enemy. Some people take advantage of the benefits that their plastic cards offer. While some get trapped in a mountain of credit cards debts.
As many people said, credit cards aren’t created equal. That statement is true. When trying to apply for credit cards, you need to do more research than just by looking at the promotions attached to those cards. After all, promotions are made to entice you to avail the card companies’ products, in this case, credit cards.
8 Effective Ways to Analyze Credit Card Offers
In this post, I will detail some of the information that you will want to take note of whenever you analyze credit cards offers and feel need to apply for new credit cards.
1. Annual Percentage Rates
It is tempting to grab the “12 Months No Interest” offers. These offers are good for those who are stickler for paying their credit cards in full and on time. These offers are also good for those people who are very disciplined and responsible in handling their finances. But if you don’t fall in one of these two categories, then, you may need to reassess your desire to open new credit cards.
Always ask yourself if you have the capacity to use and pay the cards in full. Remember the charges you put into the credit cards aren’t free. You have to pay them back at some point. If you don’t pay them in full, you will pay interest on top of interest and outstanding principal.
According to CreditCards.com, the average APR on new cards is 14.9 percent. You wouldn’t want to be charged that APR in a year. It’s just way too high and the fees you’re going to pay are just staggering.
Never reason out to yourself that the minimum amount is so low that you can afford to pay it. This reason is flawed for so many reasons. One reason is that you are basing your capacity to pay on the minimum amount not the whole charged amount. Remember if you fail to pay in full, you will pay additional fees (i.e. interest).
2. Spending habits
When you analyze credit card offers, it is always necessary to answer the questions of what you intend to do with the credit cards and how you will pay the charges you put into them. Ask yourself if you’re going to pay all the charges when they’re due or if you are going to carry some balances from month to month.
If you intend to pay in full when they’re due, then, the APR won’t really matter to you. If you intend to carry balance from month to month, then, you need to get cards with low APRs.
Ask yourself what purpose those credit cards will serve. Ask yourself again and again if you’re using the credit cards to pay for groceries, for emergencies, or others. If you intend to use such cards for everything, you will need to find cards that provide great benefits and high credit limits.
3. Credit limit
When you analyze credit card offers, always make sure that you understand what the credit limit would be. This may not be so easy to do. In reality, you may not know what the credit limits will be because credit card companies will base their decisions on how well or poor your credit score and history are.
If you are looking at boosting your credit score later on, you may want to look for credit card offers with possibilities of consistent credit limit increase. Some credit cards will automatically increase your credit limits from time to time while others don’t. Always make time to talk to credit card customer agents and discuss the questions you may have regarding possible credit limit increases.
When I first got my Discover It card, I had little over $2,000 in credit limit. Over the course of three years, my credit limit went up a couple of thousand dollars at a time. Now, my credit limit is $12,000.
Another good example is my American Express. When I opened my American Express Blue Cash I only had $5,000 in credit limit and after a year of using it, my credit limit increased to $15,000.
4. Consumer reviews
Before you apply for credit cards, make sure to check various consumer reviews as these are valuable when you analyze credit card offers. There are numerous consumer reviews out there. The ones that I am familiar with are reviews from the Consumer Reports, Credit Karma, and other credit card forums.
When you do your research and gather information on consumer reviews for the credit cards you intend to open, you are allowing yourself to get some insights on what to expect from those cards.
You will definitely see contrasting reviews from different people for the same cards. This is perfectly fine because you want to see how consumers view those credit cards. By knowing different opinions, you are better informing yourself about the possible experiences you may or will have once you have these cards.
These reviews are from people just like you. If you talk to the customer agents for those credit cards, of course, it is natural that the agents will provide endless benefits of such cards. I’m not saying that they are lying or will lie. My point is that consumer reviews will provide you first-hand experiences on those credit cards.
When you look through consumer reviews, you’ll find both positive and negative comments on the credit cards you want to open. This is normal because people do have different experiences. It doesn’t mean that if you see a reviewer bashing the credit card doesn’t mean that you should no longer pursue applying for that card.
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Benefits are among the things that you need to look into when you analyze credit card offers. According to the J.D. Power’s 2015 U.S. Credit Satisfaction Study, rewards and benefits ranked as the two main reasons that customers select credit cards.
While you may want to focus on interest and penalties associated with the cards you want to open, you should really focus on the credit card benefits. You should focus on these not because the study stated about such fact but because it’s to your advantage if you get as much benefits and rewards as you can possibly get from those cards.
Credit cards do offer benefits. Aside from the cash back, no interest charge for 12 months, and others, there are other benefits that you may not be aware of but are certainly attached to those cards.
Most credit cards offer fraud protection, free FICO score, insurance for purchases, reimbursement for loss luggage, penalty and interest waivers, and others. Try to find out what the card benefits are. It never hurts to ask for such information from the credit card companies.
I remember when my laptop crashed for no apparent reason, I called my Discover It Card to request information on product insurance. The agent I spoke to said that my laptop would be replaced with no cost on my part.
Always remember that great credit cards are those cards that offer benefits. You should be taking advantage of your credit cards and not the other way around.
6. Minimum FICO score
Credit card companies won’t tell you the minimum credit scores they require for those credit card applicants. Having said that, if you have a bad credit, you may want to stay away from those cards that are likely to be applicable to those consumers with excellent credit scores.
Again, I’m not saying that you can’t apply. You are more than welcome to apply but your chances of getting approved may be slim to none. You can visit CreditCards.com to see which cards are best for people with bad, good, and excellent credits.
You can also check Credit Sesame and Credit Karma to see the credit cards that you are most likely qualified for given your credit score.
If you find out what the credit score range is for the particular card you are trying to apply for and you are below such range, then, it is best if you re-assess your desire to get that specific card. Remember, applying for credit card means that credit card companies will pull your credit report history.
It is in your best interest to apply for cards that you’re most likely to get approved for.
7. Fees and Rewards
When you analyze credit card offers, you need to look into the cards' fees and rewards. According to a survey conducted by Auriemma Consulting Group, annual credit card fees are the most hated.
Though many credit cards don’t have annual fees, some cards do have annual fees and they are steep. These cards tend to be reward cards that provide excellent benefits to their consumers.
Before you apply for cards without or with annual fees, you need to assess your situation and ask yourself what the purpose of the credit cards will be. If you are using your credit cards for business wherein you will charge thousands of dollars in a year, then, you may find that cards with fees may not be as bad as you think they are.
You may find that you may get more benefits even though you will pay annual fees on these cards. In short, your benefits (when calculated in dollar terms) far exceed your annual fees.
On the other hand, if your purpose for getting these cards is simply to pay for gas, grocery, and some basic necessities, then, it may not be a good idea to apply for those cards with annual fees. As always, there’s an exception to this thought.
If you charge thousands of dollars every year on your credit cards, then, the benefits may over weigh the fees associated with these cards. If that’s the case, then, it’s a better idea to apply for those cards.
8. Customer service
Of course, customer service should always be part of the decision process when applying for credit cards. No matter how great the features of the cards are, they mean less than nothing if they provide bad customer service.
You wouldn’t tip your waiter if he/she provided a bad service. The same analogy applies to the credit card customer service. You shouldn’t get credit cards if you know that you won’t get the customer service you deserve.
You can always find customer service reviews through consumer reviews. You may think that you won’t need customer service because you know what you’re getting into and because you know yourself as a responsible credit card user. But there will be situations when you’ll need customer service from these cards. It is in your best interest to consider credit cards with great customer service.
Whether you are applying for credit cards with limits of $500 or $10,000, you will need to carefully analyze credit card offers. You will find that the better informed you are with credit card offers, the better decision you will make in choosing the best credit cards for you.
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