What to Consider Before Getting a New Credit Card

Applying for a new credit card is arguably one of the most important financial decisions you will ever make in your lifetime. Here are a few things to consider before making that leap.

Which credit card do I want?

There could literally be any number of reasons why you’re applying for a new credit card. You might have been swayed by the lower interest rates, by the attractive perks, or by the company’s no-annual-fees offer. Whatever reason it might be, you need to be sure that you really want this new credit card to complement your lifestyle and spending habits. For example, if you are the type of credit card user who chooses to pay at the end of each billing cycle, a card with lower APR might not be the one for you. In this scenario, one that has no annual fees is ideal because you can pay your dues at any reasonable time. On the other hand, if you let your balances carry over consistently, you may want a card that offers the lowest interest rates.

Is this card really better than the other?

You might have received credit card offers from different issuers especially if you have good credit. But just because one is offered to you doesn’t mean that it’s the best credit card for you. Be sure to look up other credit cards and see whether the one being offered to you is the one you need. To help you make up your mind, you can read customer reviews and complaints on the issuer’s website.

Do I have to worry about APR?

Don’t be fooled by credit card issuers who offer low interest rates during the introductory period. Once the introductory period ends, you might find yourself paying regular APR, or annual percentage rates, which are often higher than the introductory interest rates. It helps to ask the issuer about these things before opening a new credit card account.

Why have my rewards been revoked?

If one of the main reasons you are applying for a particular credit card is the rewards that come with a new account, you need to be aware of the fact that some rewards can be forfeited once you fail to make good on your payment. Be sure to clarify how the issuer’s rewards system works before finalizing the deal.

Can my credit card transactions be used against me?

There are times when the credit card issuer refers to your purchase records in order to assess your overall creditworthiness, thus affecting your APR. Ask the credit card company about this before signing on the dotted line, especially if you see this action as an invasion of your privacy.

What about fraud?

Perhaps the worst thing you can possibly experience when using your credit card is knowing that someone else has been using your account without your knowledge. There’s no way to know if and when you’ll fall victim to this scam, so it’s assuring to know that credit card issuers are taking all the necessary steps to keep it from happening to you. You can have the credit card company watch out for suspicious activity on your credit card account, but what's important is that they inform you of any liabilities and the maximum amount that you might possibly have to pay.

What happens if I fall on hard times?

Make sure to ask the credit card issuer about the repercussions of missing payments. Will you lose your benefits? Will you get slapped with high penalties? Will your account be charged off? It’s always better to ask about these things beforehand, so that you won’t be caught off-guard in case problems arise.