Credit card companies love to dangle juicy offers. Find out how to sort out deals from duds.
Credit card companies love to dangle juicy offers in front of you. You might be “preapproved” for a zero-percent interest credit card or valuable sign-up bonus. Maybe they want to offer you that fancy “gold” or “platinum” card.
Unfortunately, offers that sound too good to be true probably are. The amazing benefits you see in the bold lettering aren’t always what you get once you understand the fine print.
To sort out the credit card deals from duds, take a closer look before you apply. Keep these five red flags in mind:
1. Rates that aren’t guaranteed
A low interest rate is one of the big draws of new credit cards. But you might not notice the subtle caveats to the special rate.
Some offers will have “as low as” printed in small letters in front of the APR. You might also see asterisks and superscripts that refer you to the fine print, where the text explains the best interest rate is only available to applicants with the best credit.
In other words, the rate they’re using to lure you in isn’t necessarily the one you’ll get.
The best defense? Read the fine print, especially the “rates and disclosures” information. It’s not exciting, but it will reveal what is actually guaranteed. Banks are legally required to furnish this information in the easy-to-read format shown on the website of the federal Consumer Finance Protection Bureau.
And if you’re uncomfortable because you can’t tell what the ultimate rate will be, don’t apply.
2. Fool’s gold
“Gold cards” have been around for decades. Credit card companies also have added silver, platinum and even palladium to the list of precious metals used in card names.
While such cards may have indicated prestige in the past — and there are still elite cards requiring exceptional income and expenditures — most precious-metals labeling is meaningless.
Solution? Choose a credit card by comparing the benefits that really matter, like low interest rates, low fees or rewards. We have a credit card page — complete with reviews and a search function — that can help you find the right card.
3. Hyped-up business credit cards
Offers for small-business credit cards might seem like a great way to track business expenses and develop a credit history for your company. But these cards seldom live up to the hype, and they offer fewer consumer protections than consumer cards.
With most small-business cards, it’s your personal credit on the line, not that of your business. So using the card does not create or develop a credit file for your business.
In addition, small-business cards lack important protections that consumer cards have. The Credit CARD Act of 2009 applies only to consumer cards, which means your business card can still be hit with fees and rate hikes that would be illegal for your personal plastic.
So even if a particular business credit card has advantages — such as enabling you to track business expenses separately — you could be sacrificing consumer protections to get them.