There are literally thousands of credit cards out there to choose from. You receive offers in the mail, in your email, over the phone, and on the websites you surf to on the Internet. We are all inundated with credit offers, but are all credit card offers worth taking? The answer is a definite no. There are many things about accepting the offer of a credit card you need to know.
How do I know which credit card offers to accept and which ones I should stay away from? If there is one thing consumer advocates and the banking industry do agree on, it is that the abundance of convenient credit gets a lot of people in trouble because they are financially uninformed. Financial education is included in the most recent version of the Bankruptcy Reform Act.
That bill makes it much harder for consumers to bankrupt their unsecured credit card debt when they go into bankruptcy. It would also require credit counseling prior to filing for bankruptcy and instructional courses on personal financial management after bankruptcy.
So the only financial education available comes way too late, since you're already in trouble when they offer it. All this means we have to be even more careful when choosing which credit cards to sign up for.
Credit card issuers are often accused of tempting consumers into carrying more debt than they can afford. Once you are in debt and barely able to make the payments, late fees and higher interest rates increase the burden on your limited budget. This is the signal that collection agencies will soon be calling you.
How do I avoid that? Choosing which credit cards you accept is just as important as how you use the credit cards you do accept. The rest of this article will focus on choosing credit cards wisely.
Do You Know What You Can Afford? Credit card company's offers can be hard to resist. Teaser rates, rebates, and rewards are all used to convince you to use their credit card. It's up to you to figure out whether you are financially stable enough to accept them. If you think that just because they sent you an offer for credit, that you must be able to afford it, you're wrong.
That means, it's up to you. Don't let the bank or lending institution decide what you can afford. That will only get you in trouble and into credit card debt. When they send you a credit card offer, they don't know how many other offers you are getting, so they don't know what you can or cannot afford.
You decide whether or not you can afford to have more credit or not. Look at the credit cards and loans you now have. What is your total credit limit including all of your credit cards, loans, and accounts? What is your total debt owed to those credit cards, loans, and accounts? These are all things you should think over before you fill out that credit card application.
Comparing Credit Card Offers; Some things to watch for are the annual percentage rates. You need the lowest rate possible for the credit cards you plan to use the most. Watch out for hidden fees, such as processing fees, dispute resolution fees, and more. Also any credit card with interest rates that enlarge and decrease under a lot of different circumstances should raise a red flag. Study the terms very carefully before you decide. Compare the terms for each credit card you are considering or compare them to a credit card you already have and are happy with.
And if you're looking for a specific type of card If you are looking for a card that gives rewards, airline mileage, discounts, etc., use the calculator at bankrate.com and pick out the one that fits your specific needs.