Credit Cards: What You Need to Know Before Applying

Think you know everything there is to know about your credit history and how it will impact your access to credit? In 2013 it was reported that 5% of consumers in the U.S. had an error on a credit report that led to them paying a higher interest rate on a loan.

Out of all the disputes credit card companies faced 16.5% of them were about billing. That’s more than double the amount of disputes regarding interest rates or fees.

That tells us that consumers don’t fully understand and utilize credit reporting. By habitually checking your credit report you can prevent errors and fraud and save money on fees and interest.

If you’re in the market for a new credit card, there are a few steps you should take first. By following these steps you can secure a good interest rate and possibly be approved for a higher line of credit.

Prioritize

Determine what your goals are before shopping for a credit card. If you need to pay down debt on a credit card with high interest, look for credit card promotions that offer 0% balance transfer fees. If you need to make a big purchase look for cards that offer 0% interest for 12 or more months to provide ample time to pay down your debt before interest kicks in.

Shop Around

According to a consumer satisfaction survey first reported in US News Money, consumers are most satisfied with American Express. Credit Card companies that fall short include Wells Fargo and Capital One. Shop various credit card offers before applying.

Compare Rewards

Credit card point programs can be rewarding if you choose the right card. If you travel often and are looking to earn additional travel points go with a card that offers additional rewards on purchases made at hotels and on flights. If you tend to make a lot of small purchases, look for a card that rewards every day purchases like trips to the gas station or market.

Check Your Credit Score

Use a site like CreditKarma.com to get your credit score and review your credit history. If your credit card utilization is high, you may want to pay down some of your debt before applying for a new credit card. If you’ve already paid down your debt, but your score hasn’t refreshed wait for this to process before applying for an additional line of credit. By waiting you could save yourself money paid in interest later.

Access to credit can be a great thing when used responsibly. Always make sure to practice financial responsibility before applying for additional credit. Review the terms of a credit card agreement before signing up. Be aware of interest rates and due dates to stay on top of your bills and avoid late fees.