Tuesday, April 23, 2013, AM | 3 Comments
If you need a credit card, you have to be very discreet and diligent to apply for the right kind of card that can give you benefits instead of headaches for years to come. I say that because on the average Americans have in their wallet more than 8 cards one time or another. I am of the opinion that you should have 2 cards or no more than 3 at the most.
You might have received credit card applications in the mail or email. You might also have done search on your favorite search engine. You are now at a credit card website and have opened an application form to fill out, sign it and submit it to the company for approval.
Besides reading the fine print, you might also have to understand the reason why you are applying for a particular credit card. Many folks don’t care. They are excited about applying and getting a credit card, any card as long as they can charge to it.
There are different cards online and the markets they target are quite different. It’s been a lot confusing recently which one to apply for. If you don’t do thorough research, you might end up applying for a wrong card that’s not fit for your finances and how you use your credit card.
You have to be clear in your mind what kind of credit card you need. It depends on how you would want to use it.
The following are different criteria why you would apply for a certain credit card:
If you want to establish or rebuild credit…
Either you are just starting out and want to get your first credit card or you are, perhaps, coming out of bankruptcy and are trying to rebuild your credit, apply for a card that’s low in interest and can also give you rewards.
If you pay your bill on time and in full…
For you interest rate does not make much of a difference. Whether it’s low or high, you don’t care much. In this case, you apply for a credit card that can give you a variety of rewards – cash and otherwise.
However, make sure you use the card only for items you need and not just to accumulate rewards. You would be spending more money that way.
If you can’t pay your bill on time in full…
You would be better off if you apply for low interest card so you don’t accumulate more debt because of high interest rate.
If you want to transfer your balance to another card…
These kinds of cards seem to be on the rise. Many credit cards initially would issue you a card that has 0% interest rate. Look for a card that gives you a period of at least one year with 0% interest.
However, read fine prints. After the introductory period, the interest rate can hit the roof. Some cards have been known to charge more than 30% interest.
In order to avoid that high interest rate, it’s best to repay all your credit card debt before the introductory period expires. It’s very difficult but give it a try wholeheartedly.
In a Nutshell
I am sure there are other conditions as well. However, what you should do is know your basic reasons why you need to apply for a credit card.