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Examining Your Credit Card Solicitation

By Milos Pesic

If you are like many consumers, you may have received numerous credit card solicitations in the mail. In most cases, these offers are simply not worth your time and should be shredded to prevent wrong hands. Identity theft is a big problem, right? However, if you are in the market for a new credit card you may want to consider some of the offers you are receiving. Let's take a look at what constitutes a worthy offer so that you can immediately toss all others.

Credit card offers, if piled together, could easily make one entire tree at the end of the year. There is little to stop these offers from arriving at your home, and many of these credit card offers are simply not worth your time. How can you tell the difference between good credit card offers and those that aren’t so great? Here are some features of a credit card offer that you might want to consider before applying for a card:

  • Annual Fee
    Does the credit card offer include an annual fee or is it free? Some credit cards charge an annual fee, but waive it for the first year. Be sure to read the fine print to check for annual fee for the credit card considered. Why pay an annual fee if you don’t have to? Other terms you should look for are fees relating to membership activation, acceptance and maintenance. All of these fees affect the amount of credit you have on your card, especially if the fee is charged each month.
  • Balance Transfers
    Will the new card allow for you to transfer current credit card balances to their card? If so, what fees are involved? Usually, these cards will charge you a flat rate such as $50 or 3 percent of the outstanding balance. You really want to shop for those cards who waive the balance transfer fee. In addition, what is the rate on balance transfers? Some cards still charge zero percent interest on balance transfers until they are paid off. On the other hand, some special balance transfer offers only have a low interest rate for a brief time. Then your interest rate goes up quite a bit. Be aware of the interest rates of balance transfer, especially if there is a lower rate. If you can’t get that balance paid off by the time the interest rate special offer ends, you could be in for a huge interest rate surprise that you may not be able to afford.
  • Float Time
    Most cards have a grace period of 25 days before interest is charged. Some cards have no grace periods and begin to charge interest at once. Be sure to read the fine print and learn about the grace period available before interest is charged, especially if you plan on paying off your credit cards every month.
  • Late Fees
    Some companies charge a specific amount if your payments are late, or if you go over your credit limit. Read the fine print, be aware of your payment dates, and pay your bills on time. Once you go over limit on any credit card, it becomes much harder and more expensive to pay the bill down. And don’t forget that late payments make your credit score lower.
  • Default fees
    Be sure you read the fne print about default and late fees. If you are even one day late, some credit cards can significantly raise your interest. Also, other credit cards have what is called "universal default". If for some reason you were to default on a credit card with universal default, other creditors would also consider you in default, and penalize you accordingly. For instance, if your credit card was to raise your interest for a default issue, the other associated credit cards would also raise your interest because of universal default. The moral of this story is to read the small print of your credit card agreement, and to never default on your credit card or be late on your payments.
  • Rewards
    If the new card is offering to give you rewards for using the credit card, consider what those rewards are. Airline miles reward cards do you no good if you rarely fly, while cash back cards are useful for just about anyone. Remember: no rewards card is worth it if you plan on running balances from month to month.
  • APR
    Your annual percentage rate will not matter if you pay off the card monthly. However, if you plan on carrying a balance, shop for the lowest possible fixed rate going. Percentage rates make quite a bit of difference in the amount you pay on your credit card each month. Credit cards with larger annual percentage rates also take longer to pay off than do those with lower APRs.
  • Hidden Stuff
    Fees and penalties can lower the value of a credit card in no time. Check the fine print to uncover what you are really receiving.

Yes, those credit card offers received via the mail can be a hassle. However, just like mining for gold, you may find one that is worthy of your consideration.