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Finding the Credit Card for You
Your mailbox is probably filled with credit card offers. But how do you decide which offer is best for your particular situation? The website bankrate.com suggests nine questions you should ask before you sign up. To get many of these answers, you probably will have to talk to a customer service person.
Why am I applying? How will you use the card? If you pay off your balance every month, you probably don’t really care about the interest rate on unpaid balances. On the other hand, if you carry a balance or plan to use the card for a major purchase, you want the lowest possible interest rate. Also, do you want to accrue rewards points, such as airline miles or rewards from a particular store?
How does this card compare? Compare cards online by searching for “complaints,” for example. There also are websites that allow you to make a side-by-side comparison of cards.
What rate and credit line will I get? You can open the account to find out, but then you have already committed. You also can apply over the phone and push to find out what your rate and credit line will be before the account is opened. Then, if it is not what you want, don’t open the account.
What is the normal APR? If a card offers a low introductory interest rate, find out how long that rate lasts and what the rate is when it expires.
When do you reduce or revoke rewards? Some cards that offer rewards reduce or revoke them if you are late with your payment by even a day. Ask the customer service representative what the common practice is.
Can your purchases affect your credit? Some credit card companies track your purchases to make sure you remain credit-worthy. If, for example, they see a charge for a couples therapist or consistent charges from stores in a less-desirable neighborhood, they might reduce your limit or raise your APR. You need to know this before you get the card.
What if I am a co-signer? If you are a co-signer on someone else’s card – such as your college student -- you are responsible for those bills. Ask what you have to do to remove yourself as a co-signer when the time comes.
How do you prevent credit card fraud? While you are only legally liable for $50 of charges you did not make, many card companies don’t charge you anything. Also, ask if the company immediately shuts down a card if it sees a lot of large charges or charges from unfamiliar locations. Most cards will contact you before taking such action, but it is a good thing to know, especially if you travel extensively.
What if you have financial trouble? You don’t expect to have problems paying your bills, but things can happen. Make sure you understand the consequences if you fall behind on your payments.