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3 Things to Look For When Comparing Credit Card Offers

by Francine Huff

The recession has made it tough for many Americans to obtain credit cards. Card issuers have held back on sending credit card offers to many consumers, but that trend seems to have eased up a bit. In the fourth quarter of 2009, U.S. households received 398.5 million credit card offers, up 46% from the 272.5 million offers in the third quarter, according to market research firm Synovate.

So how do you decide whether or not to accept a credit card offer if it comes in the mail? Here are three things to look for in the fine print of any credit card contract:

  1. The most important thing to decide is whether you really need a credit card. What do you plan to use it for? Will you use it on a daily basis or only for special purchases? Not having enough income to either pay off a credit card in full or pay more than the monthly minimum payments may be a good indication that you can't afford a new credit line.
  2. Do you plan to pay off your credit card balance each month? Paying off balances in the past kept card holders from being subjected to a lot of extra fees, but that's no longer the case. Some credit card companies are charging annual fees to card holders, even if they don't carry a balance. For example, Bank of America is now charging annual fees of $29 to $99 to some customers, according to USA Today. Other card issuers are penalizing people with zero balances by charging inactivity fees. Become familiar with all the fees associated with a credit card before signing up.
  3. Credit card rates are under fire as many card issuers fight back against changing regulations. Many credit card companies have raised interest rates, even for their most responsible customers. Low interest credit cards are tougher to find these days, but if you have a good credit score, take the time to shop around for the best deal. That credit card offer in your mail may not be the best for your situation. Always look for the annual percentage rate in the credit card terms to understand the true cost of borrowing money.

Don't just rely on credit card offers from banks. Credit unions also offer competitive credit card deals. Find out which credit unions you may be eligible to join, and research the types of financial products they offer.

Published 11/22/10 (Modified 11/20/13)

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