How to Evaluate Credit Card Offers

The best credit card offers depend on what you're specifically looking for and what your needs are. A great offer for one person might be the opposite for you. There are a few factors to considers when evaluating credit card offers.

Cards with higher Annual Percentage Rates (APRs) aren't necessarily worse that offers with lowers APRs, depending on how you are going to use the card. Some points to consider when eveluating the APR of your credit card offer are:

• Do you want a card with more rewards?
• Are you going to pay off your balances every month?
• Are you going to transfer a balance from an old credit card to your new one?
• Are you going to take any cash advances from your new card?

Credit cards with low interest rates oftentimes have fewer rewards available to card members than cards with higher rates. If you pay off your balances every month, than a few points difference in interest rates might not matter to you if you are going to be earning better rewards.

Note that the APR being offered is not guaranteed. Frequently, the big bold advertised APR is reserved for those with the best credit score. The APR shown on an offer may change after you apply and your credit history is analyzed.

Don't forget to check to see if the rate on the card is fixed of variable. If it's a variable rate, your interest rate will change depending on "market conditions."

The back of the credit card application will have a list of major fees and interest policies.

Introductory Rates

Read through the introductory rates carefully. Often, the enticing rates you see on credit card offers are temporary and your rates will increase after a certain period of time, usually sometimes between 6 and 18 months. You might also notice different introductory rates for balance transfers than for purchases.

It's a safe bet that the introductory rate does not include cash advances. Oftentimes, cash advances have a higher interest rate, so you'll want to check the policies for cash advances if you plan on using them.

If you're planning on using your new card to consolidate credit card debt, you'll need to make a plan to pay off your balance transfer before the higher rate kicks in. If you miss a payment or pay late, your introductory rate will become void.

Evaluating the rewards that a credit card offers will most likely play an important part in making your final decision. Does the card offer rewards that you will use? Would you prefer to earn airline miles, discounts or cash back? Does the card offer a signup bonus?

If you're using a card for cash rewards, you want to make sure you're earning at least 1.5% back on purchases throughout the year. Also make sure that the benefits of receiving the rewards outweighs the possibly high interest rates and/or annual fees.

You'll want to check the terms of the rewards. If there are caps on the rewards you can earn or, for example, inconvenient black out dates for frequent flyer miles, you might want to consider other options.

The most important part in evaluating credit card rewards is to open an account that offers rewards that you will use. There are all kinds of rewards programs out there and you can surely find one that best fits you. Whether you're a frequent traveler, shopper, a college student, if you enjoy going to concerts or simply prefer cash back, there is a rewards card for you. Just make sure you understand the rewards program before signing up. Marketers can make the offer sound better than it is.

You'll want to check the fees and penalty rates of the card being offered. These might include:

• Annual Fees: Many rewards cards charge annual fees. Some annual fees may be as high as $75. Make sure that how you plan on using the card and the benefits of the card will outweigh the annual fee.
• Balance Transfer and Cash Advance Fees: Most cards will charge a transaction fee for balance transfers or cash advances, usually around the 3% mark. If you want to use the card to transfer a balance, make sure you get a good introductory rate. It never hurts to call customer service to see what deals they can offer you. Some companies will waive these fees if you're a new customer. Also, you want to check carefully how to receive promotional rates that the card might be offering. Sometimes it's more complicated to receive promotional rates than it initially appears.
  
• Missed Payments: Will the rates increase if you miss a payment? Sometimes missing payments may increase your rate to as high as 30%! Make sure you know what missing a payment will cost you. Some cards offer a grace period, where they won't charge you late fees or increase your rate if your payment is late, while others will charge you a late fee AND hike your rates if you miss your payment by even a day.
• Over Your Limit Fees: Some cards charge fees if you go over your credit limit.

The take away here is to check carefully for all the hidden rates and fees so you know exactly how much your card will cost you in different scenarios.

When you're evaluating credit card offers, always keep in mind that the goal of credit card companies is to get you to apply for and spend on their card. Through heavily researched marketing techniques, their offers are made to look extremely enticing. Though the deal make look great to you, try to keep in mind that the credit card issuers want to make money too, so ask yourself, what are they getting out of the deal?

Check who the offer is really coming from. It may appear to be from a major credit card company, but when you dig a little deeper you may find that it's actually from an independent marketer. Look at the mailing address of the reply envelope. If it says something like "Processing Center" or "Credit Card Administrator," you can shred the offer and move on.

Those "pre-approved" offers that come in the mail may not be the best option for you. If you're interested in an offer you have received in the mail, shop around and compare cards before you send in your application.

Opening and closing credit cards can affect your credit score, so choose wisely and pick a card that you plan on keeping around for a while. The trick to evaluating credit card offers is to look beyond the initial offer. Check the fees and how your rates might change after the initial introductory period. If you have any questions, don't hesitate to call customer service and have them clarify any details, just don't forget that the customer service representatives will want to sell you the card, so don't allow yourself to feel pressured to apply if you're for any reason unsure. Don't apply for a card if you don't feel completely comfortable will the terms and rates.

Checking the details of the card, making sure the rewards and benefits will outweigh the costs of having the card, and spending responsibly will ensure you get the best deal on your new credit card.

Some final questions you'll want to ask yourself when evaluating credit card offers are:

• Can I add an authorized user to this account?
• Does this credit card fit my lifestyle?
• Are the online and mobile baking tools convenient and easy to use?
• Do the benefits outweigh the costs?

I'm happy to answer any questions or comments you might have!