There are a lot of banks and credit card lenders that will offer instant approval credit cards, even unsecured credit cards for those without excellent credit. Typically the approval process consists of filling out a few questions about yourself, and your credit history, and the website does a scan of your credit and lets you know in a minute or two whether or not you’ve been approved. This is a great service for those in need of a credit card, but what should you be looking for when applying for an unsecured credit card?
First, always be aware of the amount of interest that you will have to pay on purchases. Your interest rate will lower as your credit score gets higher, or at least it should. For those of us with bad credit you can still apply for a card but some lenders won’t take the risk. For those banks that do take a risk, expect a higher interest rate as the bank will try to protect themselves for their investment. Some companies will also offer introductory rates that jump up quickly, or have terms to increase your rate in the case of late or missed payments. If this happens to you it could really add up.
The next thing you need to consider are the fees. Most credit cards will not charge you an annual fee, but other cards, such as American Express, charge a fee for the “privilege” of being a member of their service. Be sure to understand all of the fees you are required to pay as a member before signing up for the card. Once you start using the card many credit card companies won’t refund your fee and you will be stuck paying it. Worse, they could charge you interest on the fee if not paid right away.
One of the more fun things to think about are incentives that credit card companies offer to get you to sign up. Some cards offer you free vacations, some offer sports tickets and other companies will actually give you cash back. Think about things that you like and do a quick search on the internet to see if someone offers a rewards card that fits your desires, odds are there probably is one. If you are using your card for rewards though, be sure to pay your bills on time as many companies will strip benefits if you are late or miss a payment.
Once again, before you sign up for anything make sure you read and more importantly understand the rates and terms for that card. Not understanding them and getting sideswiped with fees and high interest rates can really cost you hundreds or thousands of dollars in the long run. If you aren’t sure don’t be afraid to give the card’s customer representatives a call to be sure you understand.
Tags: Credit cards, Finance, money