When you’re ready to get a new credit card, here are the three must-do steps to take before you click that “Apply Now” button. Take these three things into consideration before you apply for your new card to help you save money and find the best-fit card for you.
1. Consider your credit rating
Don’t apply for just any credit card that piques your interest; find the ones you’re more likely to be approved for. Since your credit score gets knocked a few points every time you apply for a credit card, you should be very selective about what card you apply for. Check your credit score so you know where you stand. If your score isn’t where you want it to be, and you don’t need a credit card right away, spend some time building up your credit before you apply for a credit card. Or, try a secured credit card first to help boost your credit.
When you’re ready to apply for an unsecured credit card, use Credit Karma’s Approval Odds (find it in the “My Savings” section), to find out which cards are recommended for your credit score range.
2. Consider the APR
A credit card’s APR is its annual percentage rate of interest. In other words, the APR tells you how much you’ll be charged if you don’t pay your full credit card balance by the due date. If you only pay the minimum each month, you’ll accrue interest charges; so the lower your APR, the less your outstanding debt will cost you. The national average APR is 14.94 percent.
So, how is a credit card’s APR determined? It’s based largely on your credit score. A higher credit score typically means a lower APR.
In your search, make sure to check out some credit cards that have low or zero percent introductory APRs, which will help you save money on interest if you are carrying debt. For instance, the Chase Freedom Visa has an APR as low as 9.99 percent.
3. Consider the rewards
When it comes to choosing the right credit card, find one that’s going to work for you. Look for a card that gives cash back or rewards that are useful for your lifestyle, and avoid cards whose rewards aren’t realistic for you.
For instance, the Chase Sapphire Credit Card gives you 25,000 bonus points after you spend $3,000 in your first three months, which is good for $250 toward a round-trip flight. But if you’re not one to put that much on your credit card, you may miss that initial reward.
Instead, go for a card that will earn you rewards that you’re likely to get and use. A trusty cash back card is a great choice, like the Citi Dividend World MasterCard, which gives you $100 cash back after $500 in purchases within the first three months and 5 percent cash back on seasonal categories.
A credit card is a powerful piece of plastic, and it’s one of the best tools out there for building and maintaining good credit health. So make sure you know which card will suit you best before you apply.