How To Apply For A Credit Card Without Getting Hosed

Looking to apply for a credit card that’s actually great, and not just a marketing gimmick? Here are two of my current favourite picks for those who are looking to get their first or second credit card, plus some actionable tips on how to spot and avoid “predatory” cards.

First, the good: I highly recommend the Chase Freedom VISA to those who are responsible and have good credit, but only need a no-frills cash back credit card. There is no annual fee, and when you apply using that published link you will receive up to 12 months of 0% intro APR on balance transfers, up to 6 months 0% intro APR on purchases, plus a $100 cash back bonus to your account after you make only $500 in purchases on your new card during the first three months. That’s a great offer.

If you’d prefer an airline rewards card, check out the newly revamped United Airlines credit card I reviewed in a previous post here. When you apply for that credit card, you will get 25,000 bonus miles after your very first purchase, plus a $50 statement credit to your account after that first purchase. Award flights start at around 12,500 points, so that’s enough for two free flights on United.

Now, the bad: I may get in trouble if I name the bank here, so I won’t, but recently I received a targeted offer in the mail from a very large, well-known U.S. bank. The card offer was pretty weak, but out of curiosity (since I review cards on my site, and it benefits readers when I use the card first-hand before writing about it, obviously) I applied anyway. There was a $39 annual fee right out of the gate — annual fees are not always bad, by any means, but in this case I wasn’t getting anything in return. No initial bonus points or cash back sign up package… no free flights… not even a 0% introductory rate.

To make matters worse, I was approved for an embarrassingly low $500 initial credit limit… That’s like a glorified VISA gift card.

I called the bank when I received the card — and that low credit limit — and canceled it immediately. It didn’t make sense to pay an annual fee that amounted to 7.8% of my total credit line, with no real perks.

Point here is that just because they are courting you with fancy brochures in the mail again, it doesn’t mean you should take them up on every offer. Only apply for the card you want, not necessarily the one they “pre-approve” you for. This means doing your homework on credit card review sites and drilling through to find a card that will actually enhance your life in some way — if you never fly, for instance, then an airline rewards card makes little sense. Opt for a cash back or hotel points card instead.

Also, be wary of cards targeted to “students.” Sometimes these are totally legitimate offers extended to college students who are interested in applying for a good card — but sometimes it is a marketing hook used by banks trying to get students who don’t know any better and will sign up for a card with a high APR and no substantial rewards. Read the fine print and comparison shop until you’re satisfied you know enough about what’s out there to determine if that “student” card is really a good deal for you — or only a good deal for them.

View more credit card offers and promotions over on Outlaw.

Disclosures: I used to review credit cards for a living. Also, my web site has a financial relationship with Chase — we participate in their affiliate program. No financial relationship or position on Visa Inc, United Airlines or any other company mentioned in this story at time of publication.

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