Things to Consider Before Applying for a Credit Card

Are you interested in applying for a credit card? Even if it’s just for rainy day spending, and you are interested in a reputable local bank like Guaranty Bank (, you need to understand and think of a credit card as a power tool. It can be incredibly helpful. When it’s used properly. However, if you fail to follow the proper safe working practices for even an electric drill, you could end up inflicting serious damage to yourself and your family.

That’s what a credit card can do to your financial situation and credit score, if you don’t use it wisely. Therefore, before you decide to apply for one, think about the following considerations first.

What Are Your Spending Habits Like?

Before you even start looking through the different credit cards available, you need to take an honest look at your spending habits. You need to think about whether you will pay the card off every month in full or whether you are expecting there to be some carried over in the balance from one month to the next. Is it going to be used for emergencies and as a rainy-day fund or will you just use it for everything?

You need to give thought to these, because if you are intending on paying it off fully every month, the interest rate is not important. Whereas if you anticipate there being a balance left remaining, you will want to find one with the lowest introductory rate and then a low standard rate. Obviously, if you are going to use it for everything, you need a good credit limit, but if it’s for emergencies only, you are best looking for a card with a low credit limit, low fees and low rate of interest.

Credit Card Interest Rates

You will note that credit card interest rates are marked up as annual percentage rate, otherwise known by the abbreviation APR. This comes in either the form of a variable or fixed rate. A variable interest rate, as you can probably guess, will fluctuate regularly, whereas you will always know the interest rate with a fixed rate option.

There are other triggers that can cause the amount you need to pay to increase, such as going over your credit limit or paying your card late. Shockingly, but truthfully, it could be just that the credit card company decides to change their rates. They are completely within their rights to do this, if they give you fair warning of their intentions.

Credit Card Credit Limit

The credit limit is the money you can spend, as decided by the credit card company. This will largely depend on your credit rating and history and could be from as little as a couple of hundred to 1000s of dollars. When it comes to the credit limit, you need to be cautious because you don’t want to find yourself almost going over it.

If you do exceed the limit, it can badly affect your credit rating and if you are not tardy with payments, some credit card companies will reduce the limit and bring it down even lower than their current credit card balance. As if that wasn’t bad enough, they also charge a penalty for when this happens.

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