If you’re in the market for a credit card, then I have good news for you. With the economy down, banks and lenders are working extra hard to find people to lend to with everyone cutting back. To make up for this many banks are offering instant approval credit cards to make it convenient for the customer to apply, and more importantly, get the card in the hand of the consumer so they can get out and start spending money. Here are some things to look for when applying for an instant approval credit card.
First, you need to consider the interest rate that you’re being charged. In return for taking a chance on bad credit customers, many banks and lenders will try to make up for this risk by charging you a high interest rate. Sometimes you will have a really low introductory rate to tempt you in to the card but after a set period of time the rate increases dramatically, sometimes to over 20 percent. Other cards will give you the promise of a fixed rate but if you are late on a payment that fixed rate will jump in to the 20 percent level again.
The next thing you need to consider are the fees. Most credit cards will not charge you an annual fee, but other cards, such as American Express, charge a fee for the “privilege” of being a member of their service. Be sure to understand all of the fees you are required to pay as a member before signing up for the card. Once you start using the card many credit card companies won’t refund your fee and you will be stuck paying it. Worse, they could charge you interest on the fee if not paid right away.
Not everything about applying for a card is as negative as fees and high interest rates, many cards offer fun incentives like free gas, free vacations, consumer products or even cash back on purchases, which can really add up, in a good way. If you are smart with your money you can really take advantage of these deals by using your card even though you are able to pay for it in cash. The key though is to make sure you pay off the card as soon as possible because many cards will not honor their reward incentives if you don’t pay more than the minimum balance or miss a payment.
Bottom line, read every bit of information you can before signing up for the card. I know its boring to read all that legal speak in the terms of service, but it is a necessary evil and can save you hundreds, or thousands of dollars down the line, not to mention a headache. Credit cards are a great and convenient way to pay for things but they can be just as dangerous. Be smart when you comparison shop.