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5 Vital Questions to Ask Before Applying for a Credit Card

By WTOP Staff

Applying for a credit card may not be as major a decision as applying for a mortgage or auto loan, but the card you end up with could either cost or save you hundreds of dollars in interest and rewards, so it’s worth spending some time researching and thinking about what card is right for you. Ask yourself these five questions before submitting that credit card application:

1. Is this card right for me?

There are hundreds of different credit cards available to consumers. Take advantage of the variety, and look for one that will compliment your spending habits and needs. For example, if you’re a world traveler, you may want to apply for a card that will help you rack up bonus miles and score free flights. On the other hand, if you’re a stay-at-home parent, a card that offers cash back on gas and groceries may be perfect for you. Don’t just settle for any card that sends you an offer in the mail — question whether you’ll be able to take advantage of the perks and whether there’s a better card out there for you.

Keep in mind: Unfortunately, just because you find a card you like, it doesn’t mean you’ll be approved for it. Better cards often have stricter approval requirements, and applying for too many cards doesn’t look good to potential lenders. This leads us to the next question to consider …

2. Am I likely to be approved?

The best credit cards are typically reserved for consumers with the highest credit scores. Therefore, don’t just stop your search when you find a card you want. Applying for a card typically results in a hard inquiry that can lower your score, so it’s best to be prepared and know where your credit score stands before submitting your application.

Keep in mind: Even if you know one of your credit scores, the score you received may not match the score the potential lender will pull to evaluate your credit history. There are dozens of different scoring models out there, so you may never know for sure whether you’ll be approved. Still, knowing one of your scores could give you a good idea of your scoring range and whether you have any chance of getting the card you want.

3. What’s the APR?

A card’s APR, or annual percentage rate of interest, will tell you how much you’ll be charged if you don’t pay the full balance on your credit card by the due date. If you’ve adopted the (great) habit of paying off your balances in full each month, your future card’s APR may not matter as much. However, it never hurts to look for a card with a low APR just in case an emergency comes up and you’re unable to pay in full regularly.

Keep in mind: Some cards offer 0 percent or very low introductory APRs as promotions to entice people to apply. However, these rates don’t typically last for more than a couple of years, so make sure you know what the new rate will be after the introductory period expires. If it’s extraordinarily high, it may be worth considering a different card with a lower regular APR, even if it offers a shorter introductory rate. You’ll probably have this card for years to come, so it’s important to not get distracted by temporary offers — instead, keep the long term in mind.

4. What do other people think about this card?

Let’s face it. The credit card companies want you to apply for their cards, so they’re not going to reveal the negative aspects of their products in big bold print. Terms can also be confusing and don’t provide much of an indication how the company runs its business. Reviews, on the other hand, can be telling and give you valuable insight into how a company treats its customers.

The Internet makes it easier than ever to compare offers and see what people really think about the cards you’re considering. Check out resources like Credit Karma’s extensive reviews section or Bankrate or NerdWallet’s library of credit cards to help find a card that’s good both on paper and in real life.

Keep in mind: Many people are more prone to complain than write glowing reviews. Take their opinions with a grain of salt, and look for red flags like a bunch of different reviews mentioning the same flaw.

5. Will I be able to use this card responsibly?

If you have a history of mismanaging credit, adding another card to your arsenal may not be the wisest decision. Really ask yourself, “Do I need this card? Will it tempt me to spend unnecessarily?” If your goal is to use this card to improve your credit health, you may be ready for the additional responsibility. And if you’re planning on paying off this new card’s balance in full each month, great! But if you simply want a new card because your other cards are maxed out and you want to buy that shiny new smartphone, it may wise to hold off awhile.

Keep in mind: If your answer to this question is “yes,” and you do receive a new card, don’t forget to keep your other cards active and in good standing. While it’s perfectly fine to make this spiffy new card your primary means of payment, show your older cards some love once in a while, as they help raise your average age of accounts and keep your utilization rate lower. You wouldn’t want your creditors to close them due to lack of use!

The bottom line: Just as you would hunt around for the best bargain when shopping for major purchases, the same care should be taken when applying for a credit card. Compare offers, make sure you read all the terms and conditions, and ask yourself these important questions to find the best card that suits your needs.

More from U.S. News

8 Ways to Maximize Your Credit Card Rewards

12 Simple Ways to Raise Your Credit Score

10 Ways Consumers Are Often Duped

5 Vital Questions to Ask Before Applying for a Credit Card originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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