Before You Apply, Compare
by David Tanguay
If you are considering applying for a credit card, make sure before you apply you compare the interest rates available. There are so many credit card companies willing to take your business make sure you shop yourself around first.
The interest rates that you qualify for will depend on your credit worthiness. This simply means what type of risk are you to the credit card company. Do you pay your bills on time; are you making enough money to cover your outstanding credit responsibilities?
If you are regularly late or considered what the industry refers to as a "slow pay", your interest rates are going to be higher. That means, if they have a low teaser interest rate, you are not going to qualify for it. They mean it when they say, "not all applicants will qualify for the lowest rates." On the other hand, if your credit reports shows that you are a good risk, paying on time consistently and are not over extended, you will definitely qualify for the introductory rates.
If you have a good credit rating, you have the upper hand on negotiating with credit card companies for the best available interest rates. If your credit is less than stellar, you may not get the lowest rate available but it is just as important to comparison shop before you accept an offer.
Remember when you are comparing interest rates do not let every company you are speaking with run a credit report. Make sure you specifically ask them if they are running a full credit report. If they say "yes," tell them no. Having a bunch of credit request showing on your report makes your credit score go down dramatically.
Once you have compared interest and you have narrowed it down to one or two cards, make sure you understand the terms of the offered interest rates. For instance, you might secure an interest rate at 8.99%, what happens if you are late? Usually the interest rate goes up dramatically.
Being late once, and they do not care if it is by two hours, may raise your rate to about 15%. Still not a horrible rate but it sure is not as good as your initial rate. Ask them what happens if you are late more than once. Most companies have policy in effect that if you are late more that once in a twelve-month period, they will raise your rate so high you won't believe it. Many get up there into the 30% bracket.
So, when you are comparing interest rates for credit cards, use your credit score to secure the very best rate you can possible get. Once you have it secured, make sure you always pay on time. Make sure you read and understand all terms and conditions of the card. By getting the best rate possible, you can literately save yourself hundreds of dollars a year.
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