What to look for in a credit card offer


Credit card offers come in often and in various forms. You're keeping your paper shredder in business through mail offers alone, and more ads barrage your email account and your telephone line. It can be overwhelming or annoying, but it can also pique your interest - some of the offers come with low interest rates or great rewards programs.

How do you know when to take advantage of an offer?

Make sure it's legitimate.
First, consider where the offer is from. Email offers can often seem suspicious, because of phishing schemes, but you should make sure your offer is legitimate regardless of how it's delivered.

"It's always buyer beware," says Matthew Keenan, credit and education counsellor at Credit Counselling Service of Sault Ste. Marie & District.

Even if you're sure the offer is coming from a company you trust, calling the company might get you a better deal.

"Contact your bank or the issuer and I would think they could match or even beat the offer," Keenan says. "If the offer feels weird or uncomfortable, don't go through with it."

Determine if the card suits your needs.
When you're sure the offer is sound, it's time to decide what's important to you, and why. This will depend on your personal spending and bill payment habits.

For instance, if you pay off your balance in full each month, as is recommended, then a low interest rate doesn't really matter to you because you won't pay interest. In that case, you might be much more interested in a card that has a higher APR, but comes with cash back or rewards points for your purchases.

Cards with rewards often come with an annual fee, which isn't a bad thing if you make it worth your while.

If your fee is $100, you should be able to earn a minimum of $100 in cash back annually, or be able to earn $100 worth of points, Keenan says. Otherwise, the perks don't outweigh the cost and it's not a good offer for you.

If you tend to carry balances on your credit cards, though, interest rates could be a huge deciding factor for you. This might be something to look for in a balance transfer card, so you can pay down debt quickly and get to a point where you aren't carrying a balance anymore.

If you're applying for a low-rate card for purchases, though, that might be a red flag to yourself.

Here's why: Low interest rate cards can also come with an annual fee. "If you are willing to pay the annual fee to get a low interest rate, you're indirectly saying that you're planning on carrying a balance, which isn't a good place to start," says Martin Carette, a credit counsellor with 1000 Islands Credit Counselling Service.

Not only that, the low interest rate is often a limited-time offer.

"Sometimes on a balance transfer you get a low interest rate for a year, and then the interest rate could creep up," Keenan says. Since the low rate is limited, you might have to get very aggressive with your repayments to be sure you pay off the balance before it ends.

"Transfer your balance and get that low rate, but you have to work really hard to pay it down," Keenan says. "If you're transferring $5,000 and your low rate only lasts for a year, you have to be making big payments to get that down."

Research the terms and conditions.
This brings up another important point about credit card offers: it is essential to read the whole offer, including all the tedious details.

"The fine print defines what the product really is so you understand what you're getting," Carette says.

Keenan agrees, and adds that the fine print is where you'll see information about limited-time interest rates.

"Sometimes if there's a late payment, the low interest period gets waived," he says. "All of a sudden, you're at a much higher interest rate and you're stuck."

The fine print will also detail whether cash advance, foreign transaction or late payment fees may be applicable to your account.

Bottom line: are you even in the market for a new card?
In the end, you need to be honest about why you want a card and consider offers accordingly.

"Offers are convenient, but not necessarily what you need," Carette says. "When you received that offer in the mail, you weren't looking for it, so you've got to think about it twice.

"There are all kinds of online tools for calculating the values of credit cards," Carette says, mentioning the FCAC's website in particular.

Finally, don't jump on too many offers, even if they seem great.

"You don't want to take on too many credit products," Keenan says. Having too much unused credit can negatively affect your ability to get credit in the future, and applying for too many credit products at once is a red flag to lenders, too.

"Use credit card wisely and for its intended purpose," Kennan says.

See related: When does it make sense to get a second credit card?; Newcomer credit cards: Choose and use wisely; Application denied: 6 reasons for credit rejection

Updated March 11, 2017

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