There’s an art to getting the best credit card deal – especially in a rough-and-tumble economy like this monster we’re facing. According to a recent study by the Federal Reserve, approximately 60% of U.S. banks have tightened credit card lending standards. And that was in 2008 – no doubt the landscape has darkened considerably given the southward direction of the U.S. economy so far in 2009.
So credit card companies are making it harder and harder to get a decent deal on a new card. And when they do, solid perks like card reward programs or cash-back programs are being sliced, diced and priced almost out of existence. That means, after years of handing out plastic like penny candy to first-time customers, it’s up to the consumer to dig deep to find the best new card deals.
Here's some advice to help you do just that:
Work on your credit score – Banks are leaning on credit scores more than ever, and having a number below 700 – which wouldn’t have disqualified you from a card deal three years ago – may well penalize you now. The credit analysis firm CardRatings.com says the old credit score number for getting a great credit deal was 700. Today? The new, higher-hurdle is 730. Best bet: get a hold of a free copy of your credit score (try: www.annualcreditreport.com) and see where you stand. Then check out this article for specific, step-by-step tips on improving your credit score.
Read the fine print – Credit card companies can be sneaky about inserting vague language in the small print that can lead to big fees and penalties later on. Nip that problem in the bud by studying the card’s application, especially the card’s “terms of agreement” from top-to-bottom. Keys to focus on include penalties for paying late (i.e., what happens if you’re even a day late on your monthly bill) or how much you’ll pay for exceeding the credit limit.
Bad credit? Take these steps – If you have bad credit, or are applying for a credit card for the first time, you could well run into a brick wall when applying for a credit card. Rather than bang your head, bypass that wall by grabbing a secured credit card first, then use the card prudently to boost your credit score. You’ll likely have to pony up a deposit to get the goods, and make sure you read the fine print thoroughly on such cards (some unscrupulous secured card providers aren’t above attaching hard-to-find fees that can cut into your deposit). If you’re a first-time card applicant, leverage your parent’s good credit by getting them to co-sign your card. American Express (Stock Quote: AXP) has a great deal where parents can limit a card’s maximum limit, making it a good candidate for a co-sign arrangement among family members.
Pay close attention to the APR – Credit card companies are masters of the old “bait-and-switch.” For example, they may tease you with a “low” introductory interest rate of 9.99%, then jack it up to 18.99% after a few months. Your best move: flip the application over and look for the box where the interest rate is shown. Check to see if it’s a fixed rate or one that can increase after you sign for the card. New legislation from Washington declares that card companies must carry this information (it’s called the “Schumer” box after the New York Senator instrumental in the passage of the federal Truth in Lending Act). If you’re still not clear, call the card company and ask if the rate is a fixed, permanent rate or not. The same strategy goes for “cash back” deals, as well.
There’s one more way to dig up the best credit card deal out there. Just visit BankingmyWay’s credit card center, where you can peruse great credit card deals, sortable by key card features, at the flick of a few keystrokes.
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