5 Questions to Ask When Choosing a Credit Card

Deciding to get a credit card is an important step. Even if you already have one, choosing the right card is important. Below are five issues you should address when attempting to determine which company offers the right terms for your situation.
1. What Will Your Credit Card Cost Me?
Sometimes, even just having a credit card can cost you money. Be sure to ask if the card requires an initiation fee or an annual fee and don’t forget to ask for the exact cost of those fees. An invitation-only credit card offered by American Express, by way of one example, requires a $7,500 initiation fee. That number is further bolstered by their $2,500 annual fee.
2. What Are You Getting In Return?
One of the benefits of obtaining a credit card, other than to simply help you build credit, is the offer of rewards. Contrary to to practices of some companies, there are a number of credit cards that don’t charge annual fees or high-end initiation fees. In fact, many cards will even offer cash back on purchases ranging as high as 1.5% to 2% on allowed purchases.
Some credit cards also offer points, which can later be redeemed. Each time you use a credit card, the merchant has to pay an interchange fee to the credit card company. By earning points on purchases, you’re getting a portion of that fee. The goal is to find a card that offers the most points, allowing you to cash in on a greater percentage of the fee. As the points accumulate, the cardholder can redeem them for purchases, free flights, or gift cards. Occasionally, the credit card company will partner with promoters to offer free tickets to concerts and sporting events, as well.
3. What Is The Regular APR?
Anyone who has been shopping for credit cards knows that they often offer an introductory APR (Annual Percentage Rate). This is done to hook you in and often expires within a few months. The regular APR will be higher and should be compared to the APR offered by other companies. The regular APR is listed in the terms and conditions. Alternatively, you can call a customer service rep and ask directly.
4. Can My Purchases Be Used Against Me?
This comes down to an invasion of privacy, but it does happen. Using your card to pay for car repairs or to see a therapist indicates severe life changes and the credit card company can use this to take advantage of your financial situation. Some companies will lower your credit limit or may boost your APR. To find this out ahead of investing in the card, contact the credit department manager and ask him or her directly.
5. How Does That Company Handle Fraud?
The federal government establishes a $50 liability limit on fraudulent charges, meaning you must pay the first $50 on fraudulent purchases. Some companies won’t even require you to pay that much, provided you adhere to their terms for reporting lost or stolen cards. This is another option to consider, when shopping around for your next credit card.
There are many credit card companies offering their products, using deals, bargains, and enticing offers to reel you in. The key is to find out what they offer, once that initial special interest period expires. By learning as much as you can ahead of signing for the card, you can develop a much more satisfying bond with your new credit card provider.