Updated: May 16, 2020
We all get credit card offers in the mail. When this happens, a lot of thoughts run through our mind. We wonder if should accept the offer, throw the offer away, or if we even need a new credit card. If you find yourself asking these questions, then you have come to the right place for some answers. There are major differences between most credit cards out there which includes not just their interest rates or credit limits.
So we start with a few different cards:
Store Credit Cards: Store cards are usually offered during your checkout at most large retail locations. Typically the cashier will offer a few nice perks if you agree to sign up for a credit card. However, they only work at that particular merchant location and possibly any other sister companies or subsidiaries. Some examples of merchants who offer these cards are your local gas stations, clothing stores, home improvement stores, and many more.
Store Co-branded Credit cards: These cards have the same features as store credit cards with the additional benefit of being able to using them almost anywhere due to the fact that they are linked with a payment network like Visa or MasterCard. The benefits of these cards are usually better. However, the approval process is also more stringent.
Whether it is a store credit card or a co-branded store credit card you will see a lot of different benefits from points to percentage off deals, cents off per gallon, cashback deals, and special offers on specific dates.
Secured Credit Cards: These starter cards are usually for people trying to establish credit or trying to rebuild their credit. Two examples would be Self or The Credit Builder Card, which we offer our clients as an option to help them rebuild their credit. The only difference between a secured credit card and a regular bank credit card is that you are securing the credit limit with your own money and not the bank's. The benefits are that an exceptional secured credit card reports to all 3 major credit bureaus and you have lower spending limits, which make it easy for you not to over spend. Once you cancel the account you receive your initial deposit back.
Bank Credit Cards: There are so a variety of bank issued credit card options. Having the best deal including interest rates, annual fees, and other benefits depends entirely on your credit score range and credit report. There are a small hand-full of credit cards that offer the best deals and benefits you can get, and then there is every other credit card that has a fancy name but very few benefits and higher fees or interest rates . You must read the literature that is available and compare different cards to decide whether or not you want to add an inquiry to your credit report.
The benefits most credit cards may offer:
Airline miles % Cashback on purchases
Cents off per gallon Warranties
0% interest rate for period of time Car insurance
No annual fees No introductory fee
Low interest rate for a period of time Low interest rate or 0% on balance transfers
Points from purchases
One thing most people have to remember is that just because your pre-approved, doesn't mean you are approved. When they decide to pre-approve you, they only do a soft pull on your credit report and not a hard pull, which can make or break you during the approval process.
A majority of credit cards or store credit cards have benefits and drawbacks. Some have a lot more benefits than others. If you're looking to apply for the best card, then you'll also need to have the best credit score, which is usually above 700+. That's right! There are some perks to having a very high credit score, which is why you should maintain your credit score and keep your credit utilization below 30%. We recommend, that if possible our clients should keep their utilization below 10% on all credit cards and never go over 30% on any credit card, even if other accounts may be at a zero balance. The best thing one can do is to pay it off every month and keep utilization low when the card is being used.
Your credit score will determine whether or not you get approved. Keep in mind that there are credit cards available for people in all credit score ranges and the choices are endless. That also means that bad predatory credit cards are offered to you all the time as well, and you need to know what you sign up for before you make a decision. Keep in mind opening a new credit card and closing the account quickly will reflect poorly on your credit report, so be sure you are comfortable with using your new card.
Credit Freedom recommends two different cards to our customers which can help clients build or rebuild their credit. Self has a great credit building card that is secured from your secured line of credit. This is considered a 2 for 1 deal, which you'll never really see anyone else offer. You pay a small fee up front depending on the plan chosen. Then, you make monthly payments which also depends on the plan chosen at sign up. The best part is, you get your money back at the end of the 12 month period if you choose to close the account (small fees are charged). We also offer The Credit Builder Card, which is a secured credit card that only requires a $200 deposit and no credit score approval. The best part is both options report to all 3 major credit bureaus. Positive revolving credit is a must for someone who is seeking to have a high credit score.
If you have any questions on building your credit score you can contact us today at 321-400-5260 or email firstname.lastname@example.org.