Credit Cards

GOBanking Rates

A lot of credit cards come with major perks. But the card you used all through your 20s may not reap as many rewards as the one you’d want to use as a young professional with a lot of travel on your calendar. So, whether you’re looking for your first, second, or seventh credit card, here are five tips you should consider before applying.

Know What You’re Looking For

The first rule in looking for a new credit card is to determine your credit needs. Do your research and vet several different credit card offers. While the introductory bonuses may be nice, you’ll need to look for a sustainable credit card that will be useful in your situation several years down the line.

Understand the Fees

Before applying for a credit card, be sure you understand all of the fees it comes with. If you plan on traveling abroad, for instance, you’ll want to seek a credit card with low foreign transaction fees. Some credit cards can charge up to 5% on transactions you make in other countries, which can quickly add up if you plan on using the card primarily while traveling.

Pump the Brakes

If you’re planning on purchasing a car or home soon, hold off on applying for a new credit card. This is important because you’ll receive what’s called a “hard inquiry” with each credit card application you submit. These hard inquiries can lower your credit score and put you at risk for higher interest rates when it comes time to finance a brand new ride.

Keep Old Accounts

Just because you open a new credit card account doesn’t mean you have to close another. In fact, having a diverse set of credit accounts and account ages can benefit your credit score. Only consider closing a credit account if you no longer use the card, and the credit company charges you an annual fee.

Spend Wisely

Most credit card companies lure new customers in with what’s known as a “teaser rate.” For instance, many cards will offer 0% APR for the first 12 months of your account being open. Be wise when using your card during this time and after, as the interest rates can get quite high after the introductory period.