You are possibly constantly inundated with credit card offers. You might even get several in the mail every single day. While it can be tempting to sign up for every card that you are provided, you should consider several things before applying for a credit card. Billy Crafton as a renowned financial advisor says that it important to research on the credit card company, as well as a specific card’s account benefits, features, and any fees. You also need to be sure that you are monetarily ready to take on the responsibility of a credit card.
Credit cards can be an influential financial tool if they are handled properly. However, many people make mistakes with their credit cards and end up with credit card debt, so ask yourself some questions before signing on the dotted line.
- Many cards will attract you with an introductory interest rate, or APR, of zero percent. While this might appear like a great deal at the time, be sure that you can pay off your balance during the promotional period. If not, you will be forced to pay on your card with the new interest rate, which will possibly be higher.
- If you are going to pay the complete balance at the end of every month, you must look carefully at the rewards that you can earn by using your credit card. Usually, the best deals are on the cash back cards. These cards return a proportion of your spending to you. You might be able to cash these rewards in for a higher amount on a gift card. Travel reward cards are good options and they can earn you points or miles each month to use toward travel, which can save you money.
- There are several credit cards available that you should not pay an annual fee to use your credit card. Most cards try to offer you cash back or other rewards as long as you pay an annual fee with the card. But do not be fooled. There are rewards cards that do not ask an annual fee, so you should keep looking.
- Billy Crafton from San Diego says that ideally, you should only have one or two credit cards total. You do not need more than this. It is too simple to find yourself completely overwhelmed with debt if you have more than one credit card. The safest practice is to have just one credit card that you pay off each month entirely, particularly if you are just getting started with using credit cards. If you feel like you need an additional card, think about taking out a prepaid credit card that does not charge a monthly fee or expires.
You should also research and know the penalties or fees associated with your card. For instance, your credit card company can raise your interest rates for one late payment and that is in addition to a late fee. Surpassing your card balance will also cause a knock in your interest rate.
Billy Crafton 