When you’ve embarked on the journey to build or improve your credit, choosing the right credit cards is nearly as important as paying your bill on time. Ideally, your credit card should offer low interest or APR (a minimal or nonexistent annual fee), and rewards or other incentives that fit in with your lifestyle. Unfortunately, credit card companies often use misleading language to steer unsuspecting consumers into signing up for credit card offers that do not actually help credit. As you sift through the next stack of credit card offers in your mailbox, make sure you take the time to review the fine print hiding underneath the colorful attention-grabbing headlines and lofty promises. There are certain credit card offers to think twice about taking. We’ll give you the lowdown on the most glaring offenders, so you can separate the good credit card offers from the not-so-good and downright harmful ones.
Tricky Bonus Conditions
Credit card companies count on generous welcome offers to entice new customers into signing up. The problem? If the user does not meet certain conditions — such as never holding a card from that company before — the company reserves the right to deny the bonus. What that means: Think twice before you take a credit card welcome bonus offer. You may not qualify for the offer, based on any other accounts you have ever opened with that issuer. And even if you do qualify now, the card issuer could revoke your eligibility for several reasons. Your best bet is to call up the card issuer and confirm the terms and conditions of the offer, as well as your eligibility. You will also want to hold onto the documentation setting forth the credit card offer guidelines.
Store Credit Cards
Store credit cards effectively solicit consumers with tempting offers, such as 10% or 20% discounts on purchases or the chance to earn store credit. Think about the timing of the offer — right as you are about to drop a significant amount of cash, and it’s likely when you do not have the time to carefully review the rates and the terms you are accepting. Most people only find out about the excessive interest rates after they receive the first bill a month or two later. The average APR on a store credit card can reach around 22.99%. If you do not pay the balance every month, the interest you’ll rack up will easily cancel out any of the benefits.
Low-Rate Intro Offers
Introductory offers are another example of a credit card offer you should think twice about taking. Some cards lure you in with the promise of a low-interest rate during the introductory period — a common offer for cards geared toward appliance or furniture purchases. If you fail to read the fine print, you will not find out when the intro period expires — and the rate that will then take effect. Many people are shocked to find their rates jump exponentially after the intro period. To add insult to injury, the interest usually starts accruing at the time of purchase. If you have not paid off the debt during the intro period, the interest could be charged retroactively at the higher rate.
The right kind of rewards card pays off in dividends, allowing you to earn points that can be later redeemed for travel, other high-ticket items, or cash back on the items you purchase the most. However, remember that some rewards cards can come with a hefty price tag in the form of high-interest rates or annual fees. Before you commit to a card with alluring rewards, make sure the card actually gels with your lifestyle — and doesn’t bring with it any exorbitant fees. In addition, be prepared to pay off the balance every month, or the amount you pay in interest will offset the rewards. Think twice about taking a credit card offer that sounds too good to be true.
The best kind of credit card offer can set you up for a healthier credit score. While you are shopping around for the best offer to improve your credit score, check out the rest of the services we can offer you at Ovation Credit. Our team of professionals can whip your credit report into shape quickly and efficiently. Find out how we can help you today with a free consultation here.