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Choosing a Credit Card: How to Evaluate Credit Card Offers

How to evaluate credit card offers

Credit cards can be an advantageous financial tool when chosen well and used responsibly. But the wrong card in the wrong hands can bring serious financial headaches. Choosing a credit card is a process we all go through in life, but how do you know which credit card is the right one to choose?

We’re here to demystify the process! Read on to learn what to look out for and what to avoid when picking a credit card.

What to look out for in credit card offers

Credit card offers are full of mystifying jargon and deceptive phrasing. To get your business, credit card companies make a lot of big claims. So how can you filter out the bad offers and find the gems? Try the following tips:

Don’t take them at face value

If you’ve received a credit card offer in the mail, don’t assume that it’s coming from the major credit card name thrown around by the sender. The offer may actually be from an independent marketer trying to milk more money out of you. Check the name on the return envelope. If you see “Processing Center” rather than the bank name, it’s likely an independent marketer.

And don’t confuse pre-approval offers with an offer of credit. This is just a way for creditors or independent marketers to get you to fill out an application.

Pay attention to fees

Most credit card fees vary for each person, depending on your creditworthiness. However, they typically come with some flat fees, too. When evaluating offers, consider the following:

 Annual fee

Rewards cards usually come with an annual fee, and some are heftier than others. These cards also usually offer excellent sign-up bonuses in points or cashback rewards. To make the annual fee worthwhile, make sure that you’re in a position to qualify for the bonus.

For example, many cards require that you charge a certain amount of money to your card within a few months. However, only go this route if you can comfortably pay off the balance in full. If not, the interest you pay will subtract from the benefit of the bonus.

Late payment fee

Credit cards quickly become a money pit when payments aren’t made on time. The average late payment fee that credit card companies charge is $35. This is a waste of your hard earned money. Don’t charge if you can’t pay, and always pay on time.

But if you’re worried that you may be late on your payments, find a credit card with lower-than-average late fees.

Foreign transaction fee

If you’re interested in using your card to travel, it’s imperative that you pay attention to the credit card’s foreign transaction fee.

When using your card outside of the country, you could be paying 1% – 4% in foreign transaction fees on purchases. If you plan to use your card while traveling, read the small print and choose a card with low or no foreign transaction fees.

Here’s a list of the top travel cards available in 2019, along with tips on how to choose the right one.

Read past the introductory APR

Many credit card offers that you receive will tout super-low annual percentage rates (APRs) for a limited introductory period. Some cards even offer zero-interest introductory periods! But watch out — these rates can skyrocket after the trial period ends. Make sure you check the credit card terms and conditions to see what the post-introductory APR will be. And if you’re applying for a card because of a low-interest rate offer, remember that you may qualify for the card, but not the low APR. Whether or not you qualify depends on your credit rating.

Evaluate the perks

Educate yourself on additional perks of your card. For example, most cards offer purchase protection and travel benefits. Some include car rental insurance, lost baggage protection and more. Keep an eye out for cards whose perks are most applicable to your spending habits.

If in doubt, ask for help

Interested in a given card, but can’t find a particular piece of information? You can always call the company directly for answers. You shouldn’t apply for a credit card until you understand exactly what you’re signing up for. Fortunately, any reputable credit card company has a customer service line to help you get the clarity you need.

Choosing the best credit card for you

What do you want to accomplish with your credit card? Rewards programs can help you reach travel goals, offer cash rewards, merchandise or gas stations rewards, and more. But if the card you’re applying for isn’t helping you meet an immediate goal, then the annual fee will detract from its value.

Pay attention to how you receive points. Most rewards credit cards offer the best points on specific purchases. For example, you may receive double or triple points when you use your card to purchase gas, but not for groceries. Or you may accumulate most of your points only on travel-related expenses, and less on everyday expenses. Look for a card that allows you to accumulate points or cashback based on your spending habits.

But remember, to qualify for these cards, your credit score will generally need to be in the good to excellent range.

What if you can’t qualify?

If you have low credit, or if you’ve never had a credit card before, you may not qualify for the credit card of your dreams. But don’t worry — there are cards specifically designed to help you build your credit score. Even applicants with bad or no credit can qualify for a secured credit card. And responsible use of your secured credit card can build up your credit score so that next time, you can take the offer that’s right for you!

Read here about how secured credit cards work and to explore some of your options.

Conclusion

Remember, you should never accept an offer from a credit card company before comparing it to at least three other offers. This way, you can make sure you’re getting a good deal.

Finding the right card for you can be overwhelming. There are so many options, each with their own fees, special offers, and rewards categories! Fortunately, SuperMoney has made things easy. Click here to check out side-by-side reviews of top credit card companies.