As the saying goes, “All that glitters is not gold.” This applies to credit cards as well. It’s easy to be lured in by a new card with an offer of no interest for six months or some other enticing perk, but before you sign up for anything, there are several red flags that you should look out for first. In this blog post, we will share 5 red flags to avoid when applying for a credit card so you can make sure it’s the right one for your needs.
1. A High-Interest Rate
In some instances, credit card providers have been known to charge high rates of interest on money borrowed from the card. This may be due to many factors such as delinquency in payments or unpaid bills or late payment fees. In some cases, the individual will also have an unfavourable repayment option. High-interest rates are a huge red flag and you should avoid credit cards that have this as one of their features.
2. Annual Fees
Many times, individuals will be tempted to apply for a card with an annual fee since they think it is free money. However, what many people do not realize is the fact that annual fees work like high-interest rates and do not make for a good deal. This is because it will be difficult to pay off the balance if you have both annual fees as well as high-interest rates attached. Make sure that there are no annual fees before applying for one of these cards.
3. Over Limit Charges
If your credit card has an over-limit charge, this means that they will automatically authorize more than what you owe them on the current statement without consulting with you first or telling you about it beforehand, which can result in additional charges being accrued by the individual. While some people might think this is okay since they can just pay off their dues later and avoid paying extra money, but like we mentioned earlier how high-interest rates and annual fees can add up in a big way. This is something that you should look out for when applying for a credit card to avoid any nasty surprises down the line.
4. Foreign Transaction Fee
Another thing to keep an eye out for is the foreign transaction fee, which happens automatically and could result in additional charges being accrued by the individual.
Many credit card companies charge an additional fee when the individual makes transactions in foreign currency, which can make things more expensive. This is another red flag to avoid since you will not be able to get away with it easily and may end up paying a lot of money for using your credit card abroad.
5. Low Credit Line
The individual should avoid getting a complicated credit that has a lower limit and high-interest rates because it will only end up costing them more money. Always look for cards that offer lines of credit with low-interest rates.
6. Closing down a card that’s already being used to improve your score.
This is considered as “churning” or opening and closing several accounts within a short time, which will lower the average age of all your cards so it isn’t worth doing this just for the score bump you might get for getting rid of an old account. Just use the card if it has no annual fee or tries paying off more than what you usually do each month instead.
In conclusion, the most important thing you can do is to be aware of these red flags and avoid them as much as possible. If you’re applying for a credit card from any bank or institution, make sure that they don’t have one of these six things in their application process! When it comes down to it, there are some simple mistakes people make when filling out an application which could cost them not only time but money too.