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How Borrowers Can Compare Terms and Make More Informed Choices for Credit Offers

5 Tip to Negotiate a Lower Credit Card Interest Rate

Credit cards are one of the most prolific forms of lending that are available to borrowers. According to credit card statistics for January 2017 provided by the Consumer Financial Protection Bureau, 5.3 million credit cards were originated during the month. This number represents a small fraction of the total number of credit cards that are originated each year.

How Many Credit Card Offers Did You Receive Last Year?

One reason why so many credit cards are issued is that most consumers are bombarded by multiple credit card offers throughout the year. Just because a consumer is sent a credit card offer doesn’t mean that they should accept it. Each credit card issuer will offer specific terms for the consumer to use the card, and consumers should only accept credit card offers that will provide them the best deal.

Choosing the Credit Card that’s Best for You

Since so many factors can affect whether or not a specific credit card offer is beneficial to the consumer, it can be difficult to choose between credit card offers from the various issuers. Sites like CreditSoup have tools that allow consumers to easily compare the terms offered by specific credit card issuers. Sites like these also offer valuable advice that can help consumers find other types of consumer loans, such as personal loans and debt consolidation loans that can help them pay for services that they need over time. 

What First Time Credit Card Holders Need to Know Before they Apply

Establishing a good credit history can open the door to greater financial freedom and security, but the key is to use credit wisely and only borrow amounts that you will be able to repay. First time credit card holders should be well aware of their due date, minimum payment amount, and credit limits and make an effort to follow these and other key terms and conditions of the credit card account.

Many times, a first time applicant for a credit card will not have sufficient credit or income on their own to apply for a credit card, and they may need a co-signer, or, to apply as an authorized user on an existing account before they build enough of a credit history to win approval.

Interest Rates Key Account Term for Borrowers

Applying as an authorized user when one does not have established credit may offer the applicant more favorable terms than they would otherwise qualify for, such as a lower interest rate. Other credit card companies specialize in offering credit cards to borrowers who might be at a higher risk of default. These credit card offers typically offer less favorable terms, such as higher interest rates, or may require a security deposit before allowing the holder to use the card.

While it’s important to understand all terms, first time borrowers and credit card applicants really need to pay attention and to be aware of the specific terms that relate to their interest rate. For example, a credit card may offer a low, fixed interest rate of 0%.

Unfortunately, rates like these are usually only an introductory offer, and may rise after the promotional period, which can make it harder to repay any balance that remains after the promotional period. Other times, a fixed interest rate may change to a variable rate which may fluctuate, and increase, or decrease, over time.

Payment History and Percentage of Total Credit Used Impact Credit Scores and Credit Card Approval

Regardless of which type of credit card a card holder may qualify for, and its individual terms, it’s important that credit card holders use the credit wisely, including making regular on time payments and keeping the overall credit balance on the account low at all times in order to avoid an adverse impact on one’s credit score.

In determining whether or not to issue a consumer a credit card, the issuer will look at a number of factors, including credit score, payment history, and even the types of credit that the borrower has used in the past. One of the first types of loans that many borrowers first apply for are student loans, and issuers will take into account how applicants have managed student loan debt  when deciding whether or not to issue a credit card or approve the applicant for some other type of loan. Having too many lines of open credit can also result in an issuer declining the applicant for a credit card or other loan.

Getting your first credit card is an important first step in building a good credit history that can help you qualify for other types of loans that can make it easier to pay for necessary things over time, such as a mortgage for a home, or an auto loan for your first car. Understanding the terms and conditions of the credit card offer can help consumers compare offers to find the best deal so that don’t overpay unnecessary finance charges, or use too much credit that they are unable to pay it all back.

One missed payment on a credit card can damage one’s credit score and payment history and remain on the credit report for many years. Comparing credit card offers to find the best one for you is one key step to take to help you wisely manage your credit and improve the chances that other loans will be approved in the future.

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