Having a credit card is important and while it is possible to go through life without one, having one makes it that much simpler. A credit card makes online purchases more secure and it makes it easier for people to book things like hotel rooms and rental cars. However, when it comes to actually applying for a credit card, there are several things you should avoid. The top five mistakes when applying for a credit card are all too common and can negatively affect several aspects of your life.
Not Getting the Full Scope
When you apply for a credit card, it can be easy to apply for a card because it has a great rewards program or offers you a free gift upon applying. The downfall to this is that many people forget to read the fine print, which outlines the information that is really crucial, such as interest rates, introductory interest rate expirations and annual fees. Applying for credit card number one because it offers six months of no interest and no payments and then an interest rate of 29.9 percent after the six month period is up rather than a card that does not offer no interest and no payments for six months but that has a fixed rate of 14.99 percent is a mistake. Read the fine print.
Applying for Cards with Bad Credit
If your credit score is not excellent, there is no point in applying for certain cards. Cards will inform you of the type of credit score they expect you to have; if you want to apply for a card that specifically states applicants need an excellent score and you know yours is only fair is going to do nothing but knock a few points off your credit score for an application that will be denied.
Transferring a balance from a card with a high interest rate to a card with a lower interest rate is always a good idea. However, applying for a low interest card from a bank you already have credit with is not a good idea because banks prefer to offer their best rates to new customers. This means you have a higher chance of being declined and lowering your credit score. If you are unsure of how balance transfers work, then check out this comprehensive guide from CreditCardCompare.com.au.
Exaggerating Your Income on your Application
Many credit card applicants are inclined to fib about their income on their credit card applications. They figure by adding a little to their income they will have a better chance at being approved for a card. However, when it comes to your income, lying about it can have a significant negative impact on your future. Being issued a card with a high limit because you fibbed about your income means you have a greater chance of becoming more in debt if you do not use your card wisely. You may find yourself in a position where you cannot pay back your debts because your income is not what you stated on your application.
Applying for Too Many Cards
If you want to apply for a credit card but you already have several, you need to ask yourself why you need another. Having too many credit cards is a big no-no. It negatively affects your credit score and it increases your debt. If you need a new card to help pay for old debts, you need to forgo this card application.
There’s more to applying for a credit card than meets the eye. So before you even think about clicking that application button, make sure you’ve checked and checked again that this is a card you are actually eligible for and therefore may be approved for. Nothing’s ever certain when applying to open a credit card, but if you’re aware of these common pitfalls your chance of being successful should improve!
Can you think of other mistakes that can cause your application to not be approved? Take a moment to let us and other readers know in the comments.