Opening a credit account is as easy: you fill out a quick application, and a few weeks later you get a little card in the mail. Nothing to it, right? Well, not exactly. Considering that outstanding credit card debt for U.S. households has reached over $1 trillion in 2017, opening a new credit card should not be a decision you make lightly. Whether you’re getting your first card or adding to your plastic collection, here are 10 things to consider when opening a new credit card account.
If you have questions about your financial health, contact the Cleveland bankruptcy lawyers at Luftman, Heck & Associates. We can help you navigate the complex arena of credit card debt. Call us today at (216) 586-6600.
1. Interest Rates
The annual percentage rates (APRs) on credit cards can vary wildly, depending on your credit score, the credit limit for which you’re approved, your annual income, and your repayment history. Shop around and see which companies can offer the best APR.
2. Cash Advances
Credit cards usually allow you to withdraw a cash advance, treating your credit card like an ATM card. The interest rates on cash advances are generally much higher than the credit APR. Unless you are in desperate need of quick cash for an emergency, you should probably steer clear of cash advances.
3. Annual Fees
Some credit cards charge an annual fee, offering certain perks to offset the cost. Since there are plenty of cards that don’t have the annual fee, you may want to carefully consider which option is best for you.
Rewards points or bonus points are incentives many credit card companies use to attract customers. Be sure to learn about the rewards featured and make sure to choose a card with rewards that you’ll actually use.
5. Introductory Interest Rates
Credit companies often offer an introductory interest rates that are either reduced or eliminated for several months. This enticement could be a great bonus if you can pay off your purchases during the introductory time frame.
6. Cash Back
Cash back is another reward system where you can get cash back on your card for making purchases. Make sure to read the fine print for any stipulations; for example, you may only be eligible for cash back if you can pay off your balance every month.
7. Extra Charges
Are you charged if you go over your limit or if you’re late with a payment? What about if you use the card in another country, or to transfer a balance?
8. Your Credit Score
Your credit score needs to be pretty high to get a competitive APR. To keep your good credit, you need to make timely payments and avoid going over or too close to your limit.
9. Your Spending Habits
Is the credit card for emergencies only, or do you plan to use it for more? Can you stay within a certain budget to ensure you can afford to pay off the balance every month? If there’s a chance you’ll go over your limit or be unable to make timely payments, you may want to forgo the credit card.
10. Credit Limit
Maxing out your card is obviously a bad idea, but you should also take care not to get too close to the limit. Many experts advise staying below 30 percent of your credit limit to keep your credit score from taking a hit.
Contact a Cleveland Credit Card Debt Attorney
No matter how careful you are, it’s possible for your credit card debt to spin out of control. If this happens, you may want to contact a credit card debt attorney. Luftman, Heck & Associates can schedule a free consultation with one of our experienced attorneys so you can discuss your case and determine the best course of action.