From the credit required, to introductory offers, miles, points and balance transfers, there are several things to consider when applying for a credit card.
San Diego, Calif. (PRWEB) June 25, 2013
Between TV spots, mail-in offers and online banner advertisements, credit card offers can reach consumers from all types of angles. But applying for a credit card takes serious research and consideration that goes well beyond flashy ad campaigns, which is what makes the credit card application process often arduous and misunderstood.
From the credit required, to introductory offers, miles, points and balance transfers, there are several things to consider when applying for a credit card. That's why Creditnet.com - an online personal finance authority and consumer comparison website - today released 5 credit card application tips for consumers in the market for a new card.
The first piece of advice from Creditnet.com is to shred the numerous credit card offers that find a consumer's mailbox on any given day...
1.) Shred mail-in offers and shop around
According to Creditnet, the first thing consumers should do is ignore the flattering credit cards offers they likely receive daily and take their search to the web.
"More often than not, consumers aren't getting all the information necessary to make an informed decision on whether or not to apply for a credit card offer that comes in the mail," said Jason Bushey, Vice President of Operations for Creditnet. "Mail-in offers include a ton of fine print, which can be really hard to decipher and more often than not is completely ignored."
According to Creditnet, consumers can enjoy a more personal and informed credit card comparison experience online. "Sites like Creditnet allow consumers to narrow down the cards that most apply to them based on how they plan to use the card and what kind of consumer they are," said Bushey. "Rather than accept the first offer that finds the mailbox, consumers should get familiar with which cards can work best for them; not the other way around."
2.) Know the credit required for approval
Creditnet reminds consumers that not all credit card offers are available to every consumer - in fact, far from it. A consumer's credit score dictates which cards they're most likely to get approved of, which is important to consider since hard inquiries of a consumer's credit score can have a small but negative impact on scores. So not only should a consumer know the credit required for a card, but it's important to find out their score as well.
Consumers can apply for a free credit score estimate on numerous websites online, which according to Creditnet tell some of the story but certainly not the whole thing.
"It's one thing to know your score," said Bushey, "but it's quite another to know how the credit reporting agencies came to that score." Creditnet recommends online credit monitoring tools like the ones offered by the major credit bureau TransUnion, and notes that consumers are legally entitled to one free credit report per year, which can be applied for at AnnualCreditReport.com.
3.) Budget out monthly purchases
Another tip Creditnet recommends when applying for a new credit card is for consumers to determine which categories they spend the most on each month. For example, there are credit cards that reward gas and grocery purchases more than others, while other cards offer airline-branded miles for loyal consumers that travel often.
For example, beginning July 1st and extending through September 2013, Discover it® cardholders earn 5 percent cash back on up to $1,500 in purchases made at gas stations when enrolling.
It's important to identify which purchases a household plans on making each month before applying for a card, since there are some serious savings available for consumers with good-to-excellent credit.
4.) Carrying a balance? Consider a balance transfer
For consumers carrying interest-heavy credit card debt, Creditnet recommends considering a balance transfer to save money and make paying down debt faster and cheaper.
For example, the Citi Simplicity® Card offers cardholders the chance to pay no interest for 18 months on balances transferred to this card within 4 months of account opening. That gives consumers as much as a year-and-a-half to pay down existing debt interest-free, though there is a one time balance transfer fee of 3 percent of the entire balance being transferred. Creditnet considers this a small price to pay for the opportunity to eliminate interest fees for such an extended period of time.
Creditnet's final credit application tip:
5.) Consider long-term rewards over hard-to-obtain bonus offers
Introductory bonus offers promoted by credit cards are enticing, but they're certainly not for everyone. These offers often require that a new cardholder spends a specific amount in new purchases within an allotted time frame to be eligible for the bonus. Sometimes these bonus promotions are relatively easy to meet, but other times they are not and can on occasion lead to overzealous spending by the new cardholder.
Creditnet recommends a consumer match up with a bonus offer that meets their budget, or skip the bonus offer entirely for a card whose long-term rewards could be even more beneficial. That said, there are credit cards available to consumers that offer a bonus after just the first made purchase, including the Barclaycard® Rewards MasterCard® - Excellent Credit, which offers cardholders 5,000 bonus points after the first purchase or balance transfer made - enough for $50 cash back.
Overall, Creditnet recommends that consumers research potential cards diligently, become familiar with credit scores and how they're accumulated, and ignore flashy bonus offers in favor of cards that work best for their budget when applying for a new credit card.