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How To Evaluate Credit Card Offers

What To Look For When Checking A Credit Card Offer

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When reviewing a credit card offer, consider the following:

What is the source of the offer?

Look to see whether the offer is for a bank card or a merchant card.

  • Although there may be references to VISA or MasterCard, it doesn't mean the offer is from a bank issuing those cards. The offer could be from an independent marketer.
  • Cards from merchants such as department stores or oil companies are generally only good with the issuing merchant.

If you have questions about a particular company, contact the Better Business Bureau at www.bbb.org offsite link.

What is the credit limit?

Most offers are stated as "up to" a specific limit. That doesn't mean you will automatically qualify for the limit. Call the company and explain your credit history. If you have it, mention your credit score. (For information about credit scores, including how they are determined and how to get yours, click here.

How much is the interest?

Look at:

  • What is the interest rate?
  • Is the rate only a low introductory rate? If so:
    • When does it go up? 
    • To what rate?
  • When does interest start accruing? (in other words, when does the company start earning interest?)
  • Is there a separate rate for cash advances?
  • Is there a separate rate for balances you transfer to the account?
  • What happens to interest if you make a late payment?
  • Do you have to make a purchase each month to keep the interest rate?

What fees are there?

Is there:

  • An application or processing fee? (There are credit cards with no application or processing fees.)
  • An annual fee? (There are credit cards wiith no annual fee.)
  • A fee for transferring a balance to the card? A fee to transfer a balance from this card to another one?
  • A sign up fee? A participation fee? A monthly maintenance fee?

How much are the late fees? When do they start?

What is the minimum you can pay each month?

Given the unpredictability of health, there is no way to know when a financial crunch may appear suddenly. If the worst happens, what is the minimum you have to pay each month to keep your credit in tact?  (To learn how to deal with a financial crunch, click here.)

When is payment due?

Credit cards come with dates by which payment is due. Generally you can contact the credit card company and change the date to fit with when you are most likely to have the money to pay.

What happens if you charge more than your limit?

  • Although it seems logically that a credit card company will not let you charge more than your limit, most companies do allow this practice. In fact, they usually also charge a fee when you do. If so, how much is the fee?
  • If there is a late fee, does that count toward your limit? If so, if you are close to your credit limit, a late fee could push you over. 

Does the company offer credit life, disability and other credit insurance? 

While standard advice may be that credit insurance is too expensive, that advice applies to a person with no health history. Given your history, these insurance products can be very valuable.

With some credit card companies, credit insurance is only offered when a new account is opened, or if and when the company solicits new insurance business. Find out if these coverages are offered. If so, at what cost? To learn more, see Credit Insurance.

If reading the fine print is confusing, call the company and ask a customer service representative to explain it to you. If the opinion differs from what you've read, ask for the explanation to be sent to you in a letter.

What are the perks?

If any of the following perks are of interest to you, check to see if they are included in the credit card offer:

  • Points that you can use for (i) mileage on a particular or all airlines and/or (ii) for other purposes such as purchases
  • Cash back for each dollar you spend
  • Extended warranties on items you purchase with the credit card
  • Lowest price guarantee
  • Insurance for items with you in a hotel if you charge the hotel to your card
  • Luggage delay or loss - or even damage to your luggage
  • Avoid checked baggage fees
  • Free admissions (such as to museums)
  • Concierge services to help with restaurant reservations, travel arrangements  and getting tickets to events.
  • Medical assistance outside the U.S., including transportation to a medical facility and/or home

Don't leap into a new credit card without reading the next section.


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