If you’re considering applying for a new credit card, there are many things to keep in mind that can affect your decision. From rewards to interest rates, asking yourself a series of five questions can help you select the ideal card. In the article “Five Questions to Ask Before Applying for a New Credit Card,” the experts at the Equifax Finance Blog highlight those five factors.
First, determine your credit score. Knowing what range your score is in will help you determine which cards you may be approved for. Credit scores range from 280, which is considered poor, to 850, or an excellent score. If you know your score is in the 600, or fair to good range, then it may be detrimental to apply for a credit card that requires excellent credit for approval.
Your credit score also determines the interest rate you will receive. If you plan to pay your entire balance at the end of each month, the APR may not be much of a concern. However, if you plan to carry a balance, be sure to compare interest rates and select a lower rate.
Many credit cards offer rewards, such as sky miles or reward points. These can be beneficial for those who plan to pay their balance in full each month. However, these cards often have higher interest rates than cards with no perks, so keep that in mind if you know you won’t be able to pay off the balance in full each month. If you choose to get a rewards card, make sure the rewards can be used toward an expense you currently have. If you travel frequently, having a card that offers cash back on gas purchases or airline miles may be beneficial.
Another factor to keep in mind is whether or not you will be transferring a balance to the new card. This can be a good idea if your current credit card has a high APR. Many cards offer 0 percent APR on balance transfers for a certain amount of time, which can save you hundreds of dollars in interest. However, it’s important that you ensure you can pay off that balance in the allotted time to avoid paying interest and additional fees.
Finally, decide whether or not you’re willing to pay an annual fee to use your credit card. Many cards with benefits also include an annual fee, so determine whether or not the benefits outweigh the cost.
For more information on credit scores and credit cards, visit the Equifax Finance Blog.