I don’t know about you, but I can’t remember the last time I checked my mail and didn’t see a notice that I had been “pre-approved” for a brand new credit card. The sad reality is that credit card companies are taking advantage of the fact that many Americans are struggling to make ends meet. Before you jump on the opportunity to apply for a credit card to be able to start spending again, read these five points of advice:
- Check your credit before applying for a credit card. While you may be “pre-approved” according to the notice you received in the mail, your credit score may still prevent you from being eligible for a credit card or it may jack up the interest rate you’ll have to pay. And when the credit card company checks your credit and rejects you it will add an additional ding to your credit, making it even harder to get credit in the future. A number of online companies offer free credit checks so it is easier than ever to know where you stand.
- Don’t be tempted by a card with a high interest rate. In these financial times, credit card companies are forced to be more generous about interest rates (many current credit card holders are even finding that the credit card companies are willing to lower their existing rates at their request). So hold out for a rate that makes sense for you so you won’t have to pay more later on. You can research low interest rate credit cards online.
- Many credit cards now come with perks – so think about which type of rewards program may make the most financial sense for you. If you travel by plane a lot, definitely choose a credit card that rewards you with air miles, whether for your favorite airline or for use on any airline – you can receive one or more free plane tickets a year depending on how much you charge.
- Consider applying for a credit card that is associated with your bank. This often gives you more flexibility to move money around should you encounter a shortage on either end.
- Never think of a credit card as free money! Credit card debt is a growing issue in our society, particularly among young people who tend to overspend when the payment isn’t due immediately. Treat your credit card the same way you would treat a debit card – don’t spend money that you don’t have.
