As you prepare to create a good credit score for yourself, you need to know what you are up against. That means considering any offers you get for credit cards and how they can affect you, positively or negatively. The following tips will help you decide which credit options are the best for your score.
Find out exactly what amount of credit you are being offered. A low credit amount may not help you if you need to make larger purchases, such as an appliance, or pay for a repair. A high credit limit could leave you tempted to spend more than you can afford, or could cause you problems if your credit card is stolen. Consider the offer in comparison to your current income and consider if it is right for you.
The second question to ask is what the interest rate on the card is, and how long it will stay at that level. While they may offer you a low rate up front, it often goes up over time, and very often it goes up dramatically. Know exactly what your rate will be up front in case you need to carry a balance in the future. Of course, avoid carrying a balance at all costs to ensure you don’t get into trouble down the road.
Ask about perks which come with the card, such as cash back or points programs. There is absolutely no reason to take on a credit card which doesn’t offer you some kind of incentive for using it. From AirMiles to grocery gift cards, spending money on the card should get you something in return. If not, say no thanks and find a better card available to you.
Find out if there are any financial perks which come with the card, such as times when interest isn’t applied or free balance transfers. These may be enough to cause you to choose that card over others available as they will offer you incentives other cards just don’t.
Know exactly when your payments will be due so you are never late or miss one. You should pay the bill a week ahead of the date to ensure it makes it from you or your bank to the credit card company. If you pay it on time, you will never incur interest charges.
Know about the fees you will incur if you don’t pay on time. They can sometimes go beyond just interest fees. For example, if you don’t pay on time multiple months in a row, you may end up paying extra charges because of your tardiness. Ask about all of the hidden fees you might not know about up front to ensure you aren’t caught unaware.
Many people will take any card they are offered without doing their research. This leaves them in trouble down the road. Read the fine print, use these tips and prepare to choose the best card for your needs. As long as you take your time, the outcome should be positive.