What To Know About Credit Cards Before You Apply

Considering applying for a new credit card? Opening a new credit card account is an important financial decision, and you should find out as much as possible about a card before submitting your application. Here are the most important things to be aware of when choosing a card.

Make Sure You Meet the Credit Requirements

Before you spend much time examining a particular credit card, you should first find out if your application is likely to be approved. To find out, examine the card issuer’s web site to see if the card is targeted to applicants with a specific credit profile. And if that information is not offered by the card issuer, you can look up the card at the credit card section of myFico.com.

Next, you must know your credit score, which is available from the three major consumer credit bureaus (you are entitled to one free credit report per year from each of the three major credit bureaus). In addition, many card issuers, like Discover, now offer credit scores for free on every statement. By only applying for credit cards that match your credit profile, you can avoid the disappointment of being declined for a new account, and focus on applying for the cards that you are most likely to be approved for.

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Understand the Rates and Fees

Once you’ve found a credit card that meets your approximate credit profile, the next step is to examine its rates and fees. By law, credit card issuers must disclose these details in a standardized table, which makes it easy for consumers to compare cards before applying. To find this information, look for a link labeled “terms and conditions,” “rates and fees” or “pricing and terms.”

In this table, you’ll find a card’s key terms, such as its standard interest rate for purchases, balance transfers, cash advances and, if applicable, penalties. This will also be where you can learn the details of any promotional financing offers. Other fees that must be disclosed include charges for annual membership, balance transfers, cash advances and foreign transactions. Finally, the table will show any penalty fees for late and returned payments and for exceeding your credit limit.

Understand the Rewards Structure

If you are in the market for a rewards credit card, you will want to understand the details of a credit card’s rewards program, including: The amount of rewards offered for various types of purchases, and what makes a purchase eligible to receive a higher rate of rewards; if there are limits to the amount of rewards that you can earn, or redeem, in a particular period of time; your options to redeem any points, miles or cash back (can you redeem them for only certain types of purchases?); and the terms of any sign-up bonus, specifically whether it comes with a minimum spending requirement and how long you have to meet that requirement.

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. 

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