3 Questions to Ask Yourself Before Applying for a Credit Card

3 Questions to Ask Yourself Before Applying for a Credit Card

You’re ready for a new card, but have you done the research?

With all of the offers out there for great cash back rewards, airline miles, and retail bonus points, it’s easy to fall prey to applying for a credit card before you have all the facts.

Don’t make that mistake. Before you apply, ask yourself these three questions to make sure you’re choosing wisely.

What’s the APR?

The APR of a credit card is its annual percentage rate of interest. It tells you how much you’ll be charged if you don’t pay the full credit card balance by the due date. If you pay the minimum payment each month, you’ll still accrue interest that you’ll be obligated to pay back on the remaining balance.

The  APR your credit card issuer offers is based largely on your credit score. If you’re interested in a credit card that has an APR between 12% and 20%, with a low credit score, you’ll likely end up with a higher APR.

You may be able to land a credit card that has a low introductory APR, and there are many great offers for 0% APR for up to 18 months like the Citi Platinum Select MasterCard. Just make sure you know how much your APR will reset to after the introductory rate ends before you apply.

How Useful Are the Rewards?

Cards that promise a big bundle of rewards after a large purchase sound great. The Capital One VentureSM Rewards Credit Card gives you 10,000 bonus miles after you spend $1,000 in the first three months. However, it takes approximately 25,000 miles for a round-trip U.S. flight, so you’ll need to spend more to rack up bonus miles before you can fly for free. If you’re not a big traveler, this could lead to overspending.

Look for cards that will earn you the rewards that you can realistically get and use. Try a cash back card, like the Capital One No Hassle Cash Rewards card. It will give you 2% cash back on gas and groceries—two staples you likely spend money on every week. And you’ll get 1% cash back on all other purchases.

If you do go with a rewards card, watch out for any high annual fees. Also, make sure you don’t overcharge your credit because many rewards cards charge high interest rates. Use your credit card for purchases you can pay off in full each month and still benefit from the rewards. Otherwise, the cash you’ll get back will be negated by the interest you pay.

Is My Credit Good Enough to Get Approved?

Before you start applying, make sure you stand a chance of getting approved. The most important factor when it comes to researching and applying for credit cards is your credit score. You can’t enjoy the rewards of a great credit card if your credit score isn’t high enough to get approved.

While you research credit cards, pay attention to the credit score ranges that are typically approved for the cards you’re interested in. Credit Karma’s credit cards section will show you the range of credit scores of individuals that were approved for various cards, so you can help judge if it’s an appropriate card for you. If you can’t find a card to suit your rewards style and credit, consider taking some time to improve your credit before applying for a card.

Bottom Line: A credit card is a big part of your credit life that can potentially build or bust your credit health. So make sure you only apply for one card at a time, and always take the appropriate precautions to keep your credit utilization rate under 30% of your available credit and pay on time every month.

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Credit Karma™ is a completely free credit management service that provides free credit scores, financial education, and personalized savings recommendations. We help more than 2 million consumers realize the everyday cost savings of having a good credit score.


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