According to Gallup, over 80% of people have at least one credit card, and almost a quarter say they own more than five. My question is: How many of these over 70% people took the time to shop for a credit card? I mean, really compared what multiple companies have to offer and how that aligned with their goals.
Along that train of thought, this article will hopefully provide you with five things to think about before applying for that next card – or your first one!
1) Where do you shop? This question is two-fold. On one hand, I mean at what type of establishments do you shop? For example, gas stations, restaurants, department stores, etc. On the other hand, I’m talking about location. Do you need a credit card that is accepted everywhere?
2) What perks are you looking for? Are you an avid traveler? If so, you may want to look at travel credit cards. Does cash back sound beneficial to your goals? Cash back at restaurants, entertainment, or cash back on all purchases?
3) Are you looking to transfer a balance to a 0% intro APR? I would caution you on this one. Be aware of the APR after the intro period has ended. It may be higher than what you are currently paying. Also, there may be a fee to transfer the balance. So, saying the card is free for the first year (or whatever time limit) is not really free when you factor in the percent of your balance it costs to transfer your balance. Finally, before you do go and open a new card for this reason, call your existing provider and ask them if they would lower the APR. They may say yes (especially if it would keep your business!).
4) Check out the signing bonuses! There is some pretty intense competition in the credit card world. There are some great bonuses that some cards are offering!
5) Always read the fine print – especially when it comes to fees! There are fees that people are willing to pay, such as an annual fee – especially when the perks and rewards are worth it. Then there are fees that practically no one likes to pay, such as a late payment fee, foreign transaction fee, or an over-the-limit fee.
While most people have more than one credit card, that is not necessarily a bad thing. Mixing and matching your credit cards to tailor your cards to your spending habits and preferences and what your goals are allows you to take advantage if various rewards.
Your credit mix is just one factor of how your credit score is calculated. Read about the other factors here.
