5 Things You Should Be Aware of Before Applying for a Credit Card

If you’re someone who has never owned a credit card before and you’re thinking about applying for one, this is a great article for you to read. The reason why is because although credit cards can make life convenient when it comes to making larger purchases or booking reservations for hotels and flights, they are not something that should be used without a lot of caution.

In fact, according to many published reports, the average credit card debt per household is around $15,000. Oftentimes, thanks to fees and interest, it can take years to pay the debt off.

So, before applying for a credit card, please be aware of the following points. That way, should you decide to get one, it can make life easier rather than financially stressful.

Credit cards are loans. Some people make the mistake of overlooking the fact that a credit card is not “free money”. It is basically a loan that comes in the form of a small plastic card that you can fit inside of your wallet. That’s why you should stop to think long and hard about if you have the finances and the self-discipline to have one. A credit card should not be something that will help you to incur debt.

The higher the limit, the higher the interest. Although you may notice some credit card offers that state you will have a high limit from the very beginning, that’s not automatically a good thing. While you may be able to spend more, it oftentimes means that your interest rate is going to be a lot higher too. That’s why you should look into both the limit as well as the interest beforehand.

Make sure you know the billing cycle and grace period. Speaking of interest rates, there are a lot of credit cards on the market that start off charging you interest from the very moment that you make your purchase. This means that if you don’t pay your balance off in full that month, it will automatically roll over into the next billing cycle and significantly increase the amount that you owe. For this reason, it’s also important to know how a credit card company plans to bill you and if they offer a grace period when it comes to payments. If it doesn’t, you’re better off looking for one that will.

Learn the “fine print” about variable rates. When you’re reading the fine print, there’s a pretty good chance that you’re looking for things like what the credit card rewards are on various credit card purchases so that you can earn points or discounts. However, something else that you should look for is what the company says about variable rates. This is relevant because sometimes they have to tendency to increase rather steeply over time. In fact, don’t put a lot of confidence in “fixed rate” cards either. Usually it’s only “fixed” until the company decides to change it.

It’s important to read the contract. Finally, don’t forget to read the contract in its entirety before signing up for a credit card. Although it might take you a while to get all the way through it, it’s essential that you know exactly what you’re getting yourself into. And if you have any questions, contact the credit card company directly. They are there to assist you with any questions, comments or concerns that you might have. For more information on how to choose the best credit card for your budget and lifestyle, visit Credit Cards and put “picking the right credit card” in the search field.