October 28th, 2011
Credit Card Trick-or-Treat: How to avoid getting spooked
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Just as you can choose to dress up as something fun for Halloween, you can pick a credit card that won’t spook you or your credit score. The best thing to do so is to seek out the credit card with the “treats” that suit you, and to know how to avoid any “tricks” they could bring with them. Check out our credit card recommendations.
Balance transfer cards: For the ghosts of credit-card debt past
Treat: A 0% APR for balance transfers makes this type of card a great choice for people juggling credit card debt across several different credit cards. Why pay interest on multiple balances if you can work on paying off your debt without accruing interest?
The best balance transfer cards are typically available to those with good to excellent credit. For example, the average credit score approved for the Capital One Platinum Prestige Credit Card, a popular balance transfer card at Credit Karma, is 724.
Trick: There’s typically a balance transfer fee of 3 to 5% added to the total amount of transferred credit card debt, which is typically capped at $90. In most cases, the balance transfer rate will be cancelled if you are late on a payment. Remember that a balance transfer card should function as a tool to better manage your credit card debt, so resist the temptation to make new purchases on your card.
We suggest: The Platinum Select MasterCard from Citi. It has a 0% APR on both balance transfers and purchases for 21 months, and the average credit score approved is702.
Store credit cards: For those ghoulishly addicted to shopping
Treat: Great discounts and special sale promotions. Most store credit cards are easy to qualify for; the average retail cardholder has a score of 691. Plus, many cards offer a large discount when you first apply.
If you choose to apply for a store credit card, do so wisely by choosing a card for a store you frequent often. That way, you can maximize your discounts for items you purchase normally.
Trick: Store cards have historically high interest rates. If you carry over a balance on your Macy’s store credit card, you’ll pay 24.5% in interest. Store cards can also lead to impulse buying or unnecessary shopping. You may buy something you need just to get the card perks.
We suggest: The Target Credit Card. You can get 5% back in rewards on Target shopping trips and this card can be used anywhere Visa credit cards are accepted.
Cash back credit cards: For the trick-or-treater hungry for cash
Treat: You get a percentage of cash back for your purchases, usually 1-5%. Unlike points from rewards credit cards, cash back rewards cannot be devalued because a dollar will always equal a dollar. If you use your card responsibly, you essentially earn extra dollars just for spending on your card.
Choose a cash back card with no annual fee so that your cash back bonus isn’t instantly cancelled out.
Trick: High cash back rates, around 5%, are reserved for specific spending categories; otherwise, cash back is typically 1% on most purchases. For revolving categories, you sometimes have to sign up each quarter for the increased cash back bonus, so make sure you pay attention to your card’s terms. Lastly, some cards will cap the amount of cash back you can earn each year or restrict the times you can withdraw your cash back rewards.
We suggest: The Freedom from Chase Visa offers 5% cash back on up to $1,500 spent on dining, department stores, movie theaters and charitable organizations from Oct. 1 through Dec. 31. If you optimize your purchases based on the revolving categories, you can really maximize your cash back earning potential.
Bottom Line: Choosing the right credit card is like deciding on a Halloween costume: It has to fit you just right. To find your right fit, check out Credit Karma’s Credit Card Reviews & Statistics. Read real consumer reviews of credit cards and research which card might be right for you based on lots of different factors. Now go put on your Kate Middleton or Harold Camping costume, and get to trick-or-treating!
Have a Karmic day,
Bethy Hardeman, Social Media Maven
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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.