6 Ways to Tell If a Credit Card Offer Is a Good One


Credit cards can be a powerful tool for your finances if you use them wisely. In order to do that, though, you need to know exactly what you're getting into with each credit card. Here's what you should look for to determine if a credit card offer is good or not.

1. Look for the lowest interest rate

Saying "low interest rate" and "credit card" in the same sentence is almost paradoxical; credit cards are high-interest loans, which is why carrying a balance on them is such a bad idea. However, within the limited world of credit card interest rates, you want to go as low as possible.

Credit card interest rates can range from 13 percent all the way up to 22 percent. You'll want to consider two interest rates when you look at a credit card offer: the introductory interest rate, and the annual percentage rate that kicks in once that introductory period is over. (See also: The Best Low Interest Rate Credit Cards)

2. Consider the introductory interest rate

Sometimes it's worthwhile to take a card with a higher APR if it also provides a longer, lower introductory interest rate. It depends on how you plan to use the card. For instance, if you're going to make a big purchase on a card and pay it off within a few months, you might want to get the card with the 0 percent introductory interest rate for 15 months, even though its annual rate is higher than another offer.

The key here, of course, is to be sure you stick to your plan and pay off the balance before the introductory term is up. Be aware, too, of factors that could cause that introductory rate to go away sooner than expected; one missed or late payment, for instance, might cause the 0 percent interest rate to turn into that 19 percent interest rate you really want to avoid. (See also: 6 Things You Might Miss in Your Credit Card's Fine Print)

3. Look into the points and perks

Some people use credit cards to their advantage by accumulating reward points or other perks. If you're smart with your credit card use and pay off your balance monthly, that can be a good plan.

But it's only worth the trouble if the points or perks are things that have value for you in real life. If you travel frequently, for example, a credit card that gets you hotel room discounts and better airfare can be a great deal. Shop around for the best points-per-purchase ratio so you get the most return for your dollars spent. (See also: The Best Travel Reward Credit Cards)

And, of course, you'll need to be aware of any fine print that might keep you from accumulating those points or perks. For example, are there particular types of purchases that don't count for credit card rewards? If so, can you still use your credit card enough on other, valid purchases to accumulate the rewards you want?

4. Check out their protective policies

Identity theft is a very real issue, and you'll want to know that any credit card you use has good security measures in place to prevent it from happening. You should also look for a card that will protect you and your assets in the case of identity theft or fraudulent purchases. What are their terms for protecting your identity, and what action will they take if your card is lost, stolen, or used fraudulently? (See also: 14 Awesome Credit Card Perks You Didn't Know About)

Most legitimate credit card companies offer fraud protection, but don't assume that's so. Read the fine print to be sure that the card you're considering will cover any fraudulent charges. Will they require you to provide proof of any kind in order to receive reimbursement?

5. Check out all possible fees

Are there hidden fees for every possible scenario? It's standard for a credit card to come with fees for late or missed payments, of course. How much are these fees, and when are they assessed? Do the fees increase if you accumulate more than one? Are there unexpected ways in which you could end up accruing fees? There may be fees for particular types of transactions (such as cash advances or balance transfers). Look for a card offer that designates the fees it will assess and the amount for each one so you can be sure to avoid them. (See also: The Best Credit Cards With No Balance Transfer Fees)

6. Consider all potential use limits

How you plan to use the card is a big factor in which the credit card offer can benefit you the most. For example, if you want a credit card to use while traveling, you'll need to make sure the card is accepted at most places where you are going, and has no foreign transaction fees. If, on the other hand, you want a credit card for your child to use at college, you might prefer a card with a lower credit limit and a more forgiving interest rate. (See also: 4 Important Ways College Students Should Use Credit Cards)

Consider how you'll use the card and search for an offer that gives you the maximum benefits for the precise use you have in mind. Knowing how you'll use a credit card is key to using one wisely, and remember: In all cases, paying off the balance as quickly as possible is key to keeping more money in your pocket. (See also: 12 Travel Perks You Didn't Know Your Credit Card Had)

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