There are many things to consider before applying for a credit card. First of all, every time that you apply for credit, whether at a department store (Free Gift for Applying!) or at a bank, with a mail-in or an on-line application, it shows up on your credit report. If you put in lots of applications, it makes you look desperate for credit. If you have lots of open accounts, even if they have a zero balance, lenders considering your application for a car loan or a mortgage fear that you can use this open line of credit at any time, making it difficult for you to make that car or loan payment. So, compare interest rates and fees charge by different companies, before you even send in an application and second avoid those department store credit cards. They charged higher interest rates and fees.

Lifestyle Considerations

Consider where you shop. Not all retailers accept all cards. Consider how much you travel. Not all cards are accepted world wide and some cards offer you the option of earning frequent flyer miles when you make purchases using their card. Consider what you buy frequently. Certain cards offer discounts on specific items, like jewelry and computer accessories. Consider whether you pay your balance off monthly or carry a balance over from month to month. If you carry a balance, forget about cash back rebates and frequent flyer miles, the one credit card feature that will make the most difference to you is the interest rate.

Establishing Credit

If this is your first credit card, it may be wise to start out with a prepaid or stored value card. Some of these report to a credit bureau and only require a social security number, that you are over 18 years of age and that you are a U.S. citizen to qualify. A secured credit card is similar to a prepaid credit card. The available credit on a secured credit card is linked to a balance in a savings account. For example, a $500 balance in a savings account at the issuing bank provides a $500 line of credit. These cards help you to establish credit, because they report to the three major credit bureaus. In addition to the requirements of a stored value card, they will require that you earn a yearly salary of at least $12,000 and that you have a telephone in your home.

Balance Transfers

Many companies offer terms like zero percent interest on balance transfers. If you are considering applying from one of these offers, it is important to “read the fine print”. Compare the length of time for which the special interest rate applies. Some only offer the low rate for a few months and some for over a year. Remember to compare the normal annual percentage rate, because the special usually only applies to transferred balances and not to new charges. Remember to continue making payments on the first card, until you are sure the balance has been transferred and the account is closed, else you could get stuck with a late payment fee and the second company can negate the offer if a late payment shows up on your credit report.