Most people get alot of “pre-approved” credit card offers constantly. The current wave of offers includes “cash back”. That is bait that you don’t want to take. I recommend you OPT OUT of prescreened credit card offers!

Usually these offers state that you wil get a check for 1%-5% back on purchases made with the card. In return, the interest rate may be a little higher than a non-cashback card or maybe there is a higher annual fee. Alot of us just start filling out the application before really looking into the full offer.

Here are some things to consider before you fill out a credit card application:

The 30-day Rule
Credit card companies always have a clause in their terms that allows them to change ANY of the rules provided they send you 30-day written notice. Now, you should not expect a nice form letter mailed to your house showing you the changes. Instead, they will send you a little booklet of all the terms and conditions. You are well advised to read these things instead of just tossing them in the garbage (like I used to do).

Transaction Fees on Balance Transfers
Let’s say that you currently have an 18.95% credit card with a substantial balance. The offer to move that balance to a new card at 15% card may seem tempting. You have to consider this. Does the new card have a Transaction Fee applied to balance transfers? Most cards do and the average fee is 3%. So to move your balance you will have to pay a substantial fee.

Annual Fee
Why pay a company a fee just to have the ability to spend money you don’t have? The only way I would recommend paying an annual fee is if you are using the card for the sole purpose of moving a balance from another card because of the lower interest rate. However, do the math to make sure you are coming out ahead. See Transaction Fees above.

What is the cash back incentive limit?
The only place you will see this on the application is in the Terms and Conditions and generally in small text that you can barely see. Most cards limit your cash back rebates for the year.

How long will I get the introductory interest rate?
If you are not planning to payoff the card at the end of the month and you let the balance continue by making the minimum payment, the low interest rate card turns into a high interest rate card most of the time. See the Terms and Conditions for the card to check for this trick.

Don’t use cash advances
Cash Advances have their own special interest rate on most cards and they are usually at least 10% higher then your normal rate.

International Transaction Fees
If you international traveler, make sure that your card doesn’t add a Foreign Currency Transaction Fee. That fee is usually an additional 3%.

Don’t miss payments!
If you miss a payment, your interest rate will skyrocket. See the Terms and Conditions. It will say something like “However, all your APRs may automatically increase up to the 31.99% variable default rate if you default under any Card Agreement that you have with us.”

Summary
I think it’s important to establish credit for major things that we all need (or should have). A good reason to use credit is to buy a home or for an emergency. Alot of us tend to WAY overuse credit and when life gets rocky we end up SCREWED by our high credit card debt, high interest rate car loans, high department store debt, etc. DON’T OVERUSE YOUR CREDIT!

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