“The credit card business is super-competitive right now,” says Matt Schulz, a Senior Industry Analyst at CreditCards.com. “People are spending again. Banks are lending again. That’s all led to better deals for credit card customers willing to do their homework.”
Rather than getting a credit card from your bank, or accepting the first credit card offer you receive in the mail, Schulz suggests getting out there and actively searching for the best deals for you. Sites like Quizzle offer to help you find good credit card deals, and you might be surprised at what’s available. “Go online and see what’s out there. There are plenty of deals to be had,” he continues.
How to find the right credit card for you
Comparing credit card offers isn’t just about looking for certain criteria. Schulz says that the first step is understanding yourself and your needs. “Why do you want the card?” he says. “Are you looking for rewards? Are you trying to rebuild your credit? Do you want a balance transfer?”
The use to which you plan to put the card should be the first consideration when comparing credit card offers. “Knowing what you want from the card is the key to getting the most from your card Schulz points out. “If you never fly anywhere, you probably shouldn’t bother with an airline card.” Start out by comparing cards that meet your needs, and don’t waste your time with cards that don’t fulfill a purpose in your overall financial plan.
Once you know what matters most to you from your card, it’s time to look at other factors. “Pay close attention to the costs associated with the card,” says Schulz. He points out that some of the costs of credit cards include:
Balance transfer fees
Foreign transaction fees
These fees vary widely, according Schulz, and you should realize what you’re getting into. If you know that you will occasionally carry a balance, the APR is very important. You should also consider how many rewards you are likely to earn in a year from regular purchases you make. An annual fee might not be a big deal if you have the potential to earn higher rewards that aren’t capped. With the right strategy, your rewards can offset your annual fee and still help you come out ahead in rewards than what you would have earned with a card without an annual fee.
If you are getting a card for a balance transfer, one of the considerations is how long the transfer period lasts. A card with a promotional period of 18 months can be of greater benefit to you than a card with a nine-month intro period. If you know you can pay off the balance in 18 months, it isn’t as important that the regular APR is higher on that card if the nine-month card will start charging you interest much earlier.
Schulz also recommends considering the perks that come with a credit card. If you are choosing between cards that have similar costs and requirements, turn to the perks to help you make a decisions. “Is there a signup bonus? Does it come with a free credit score? Will the issuer allow you one late payment without charging a fee?” he says. “Are there special perks such as a concierge and travel discounts?”
What to do if you are rejected
Of course, applying for a credit card doesn’t automatically mean that you will be approved. “If you get rejected, there’s no need to panic,” Schulz insists. “You should try to find out why it happened.”
He suggests reading the rejection letter. You can even call the bank for more information. The rejection letter should include information about why you were turned down, whether it was because you don’t have a long enough credit history or whether your credit utilization is too high. Schulz also points out that sometimes the reason given points to a mistake on your credit application or in your credit report. “Fix those problems, and if there are larger issues, commit yourself to putting in the work to build your credit in the coming months.”
Using tools like those offered by Quizzle can also help you identify cards that you are more likely to qualify for. This provides you with a realistic idea of what to expect.
Schulz does say that you might want to apply for another card if you are rejected, but it’s a delicate balance. “Applying for one card after getting rejected for another is fine,” he says. “Applying for five others is not a good idea. It can hurt your credit, and issuers can view it as desperate.”
The process of applying for a new credit card isn’t just about trying to get something you want. You also need to consider the implications of your move, since your credit will be impacted by your inquiry. If you don’t qualify for the card you want, take the time to evaluate your situation and work toward getting your credit in good shape so you qualify next time. According to Schulz, “It’s best to take a more strategic, measured approach to credit card applications.”