The Right Way to Get a Credit Card

Posted by Nick Niesen on October 29th, 2010

If you are like the rest of us, you are probably bombarded on a daily basis with credit card offers. Most are from Visa, Master Card, American Express, or Discover, and, often times two or three from the same company. I?m sure you have even heard the stories of dogs getting credit card offers.

So how do you know which one to choose from? Are they all bad? Is there ever a time when a credit card is actually a good thing?

Well, the answer to all of the questions above, like most things in the financial world, is that it depends completely on your financial situation and what you intend to use the card for. Since no two people are alike and it would be impossible to go over every situation, lets stick to the basics and then you can take these principles and apply them to your life.

INTRODUCTORY OFFER

I am sure it is no surprise that this is both a good thing and a bad thing. Most cards today are offering 0% for a certain period of time. This 0% offer is usually on Balance Transfers, existing credit card debt you want to move to the new card and new purchases during the introductory time frame.

After the introductory period is over, the credit card charges you the interest rate that they want. The ?real? interest rate, the one that takes effect after the introductory period, is not a fixed rate unless it explicitly says so. The majority of the time it is a variable rate that changes over time. The ?real? interest rate will be located on the back in the fine print. Paying careful attention to this can cost you thousands of dollars.

WHAT BANK IS MAKING THE OFFER

The credit card that you are applying for is a Visa, Master Card, etc., but it is issued by a bank. The bank is the company that is actually giving you the loan. After all, a credit card is only a loan that you can choose to use or not at your discretion. When you use the card, you owe the bank the money, not Visa.

Get online and check out the bank that is issuing the card. Are they a big bank? Do they have a history of quality service? Can you get a live person, one that you can understand, on the phone? These are important things consider because if you have a problem, you will have to take care of it with the bank.

THE FINE PRINT

Be sure to read the fine print,? it?s a cliché for a reason. What you are signing when you apply for a credit card is a legal document. You are agreeing to the terms and conditions of the issuer, the bank. By signing, you are stating that you are responsible for the card. The issuer can take you to court if necessary.
I don?t know is not an excuse or a defense. Read everything before you sign the agree and get the card. If you don?t understand something, ask a friend to read it. If they don?t understand it then talk to a paralegal or a lawyer. DO NOT disregard the fine print.

SUMMARY

Credit cards are not bad; they can actually be a very powerful financial tool. The problem is that people don?t use them properly, and this starts when you sign-up for the card. Always read the fine print, know who you are getting the card from, and double check the facts like the introductory offer and the ?real? interest rate. Never sign-up for a card without knowing exactly what you are getting yourself into.