Friday, April 12, 2013

Things you should know about credit cards before you choose one.

There is a lot of things to consider before starting a "relationship" with a credit card company.  I say "relationship" because it is a long term commitment.  Whether you use the credit card or not most likely you will have the account for a very long time.

The reason for this is mainly because of one simply reason.  If you decide to end the "relationship" it is going to look bad on your credit score.  Therefore it is always best to keep the account open with no balance verses closing the account completely.  The reason it looks bad on your credit report is that the report doesn't consider the reason behind the termination.  It will assume that the credit card company was the ones that terminated the account due to late payments or other misuse of the card.

This is the reason that it is very important to look at several factors before choosing the perfect card for you.

1.  Make sure you understand the APR (Annual Percentage Rate) and all other fees that the card may accumulate over time.

2.  Retail Credit Cards usually have a nice discount for purchased made in a specific store, but, generally will charge a much higher APR than other general credit cards.

3.  Look into at least 20 different credit cards before choosing the one that is right for your situations.

4.  Don't spend more than you can pay back.  (Easy to say hard to do)

5.  Rewards cards can look "pretty" but be very careful.  These are really only good for those that are able to follow step number 4.  Which means that the rewards are generally not worth the amount of fees and interest that you will generate over time. Make sure not to choose a card just because the rewards look nice.

6.  Never base your decision based on what the card looks like. (I even drew you a photo to make sure that this rule sticks)

Blogger Notes:  I own all of the copyright to all photos and writing presented on this blog posting.  I hope that you find these tips handy.

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