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When you’re ready to apply for a new credit card, you might compare different offers and choose a card that best fits your lifestyle. You may apply for a particular credit card based on its advertised terms, yet receive a credit card with entirely different terms.
Credit card companies are famous for sending pre-approved credit card offers that promote the best programs and terms. Many excitably apply for these offers, only to learn that they don’t qualify for certain features. However, there is no rule that says you have to accept a credit card from a bank.
Don’t just hastily activate a new credit card that you receive in the mail. Below I’ve listed four things to look for when you get a new credit card in the mail. Based on these features, decide whether you want to keep the account or decline the offer.
- Interest rate. The credit card application may advertise 0% interest for the first 12 months. But if you don’t have perfect credit, you may not be eligible for this offer. Once you receive your credit card, read the information carefully to learn if your interest rate on purchases and balance transfers. If the rate is higher than you anticipated, you can cancel or decline the credit card.
- Credit limit. Different factors determine the credit limit on your credit card, such as your income, your credit score and your existing debt load. The credit card company may issue a credit limit as low as $500, or as high as $10,000. A high credit score and successfully managing your existing debt may justify a high credit limit. However, you can decline the card if you’re not comfortable with a high limit.
- Fees. Credit card applications will disclose fees. But if you overlooked these fees when applying, review this information before activating your new credit card. Typical fees can include an annual fee, a late fee, an over-the-limit fee, a cash advance fee and a balance transfer fee. If you acquire a credit card to build or reestablish your credit, you might have a monthly maintenance fee, as well as a setup fee.
- Grace period. This is the period in which you pay no interest on purchases made with your credit card. If you plan on paying off your balance in full each month, choosing a credit card with a grace period is one way to avoid interest charges. A typical grace period is 21 days, and this only applies to new purchases. If a credit card doesn’t have a grace period, interest incurs from the date of each transaction.
If you make the decision to decline a new credit card, do not activate the card. Contact the issuing creditor immediately and notify the company of your decision. Don’t simply shred the unactivated credit card. Even if you don’t activate the account, the credit card may show as “open” in the company’s record. Because this is a newer account, canceling the account will have little (if any) impact on your credit score. Once you’ve closed the account, destroy the credit card.