Trick or Treat? How to Tell If a Credit Card Offer Is a Good Deal

The answer is buried in the fine print.

You've probably received an unsolicited credit card offer before. They often get thrown straight in the garbage, but you may have occasionally wondered whether that offer is actually worth applying for. If you're new to credit cards or aren't familiar with their terms, it isn't always easy to parse out the sweet deals from the bad apples. 

You can't always trust what the company says on their website or in its marketing materials because of course they're going to make the card sound like the fanciest thing you can put in your wallet. But the cardholder agreement -- that doesn't lie. Here are a few things you should look for before you fill out that application.

Annual percentage rate (APR)

Your annual percentage rate (APR) tells you how quickly any balance you carry from month to month will grow. This doesn't matter as much if you always pay your bill in full every month. But if you've been known to carry a balance, it's probably the most important important feature to focus on when choosing a credit card.

Credit card APRs are based on your credit score. Individuals with excellent credit can get APRs that are less than 14%, while those with poor credit can get stuck paying 30% or more. Some cards offer 0% introductory APRs for a certain period of time -- usually between six and 21 months -- and this can be a great deal if you're trying to finance a large purchase or pay down credit card debt. But make sure that you understand whether this applies to new purchases, balance transfers, or both before you sign up.

You want to keep your APR as low as possible. Compare the APR on a new credit card offer to the APRs you're already paying and look for one that is the same, if not lower. If you like everything about the card except for its APR, you might be able to negotiate that with the credit card issuer. 

Fees

Another way credit card companies can trick you is by offering a lower APR and then nickel-and-diming you for everything. Some cards charge annual fees, foreign transaction fees, balance transfer fees, cash advance fees, and late payment fees. You probably won't run into all of these, but even a couple of them can add up quickly and make your bills a lot more expensive.

Your cardholder agreement should have a table at the top of it listing all fees associated with the card. Read through them and make sure you're comfortable paying what they're charging. There are some fees that you might be able to avoid altogether, and as long as you pay on time, you won't have to worry about late fees. Compare the fees against the cards in your wallet and top credit cards on the market, and avoid any that seem excessive. If it's a rewards credit card, make sure that the value of the rewards you expect to earn will exceed the card's annual fee.

Grace period

Your grace period is the time between the end of your billing cycle and when your payment for that month is due. Grace periods used to be 25 days, but some companies have shrunk them down to 21 days. If you're used to a 25-day grace period and don't realize that your new card has a shorter one, you could accidentally rack up late payment fees and interest charges.

If you don't like your current payment due date, your card company will usually let you adjust this so that you can time your payments to be due around the time you get paid. 

Rewards

When choosing a rewards credit card, you first have to think about the types of rewards that best suit you. Cash back is a versatile option. But if you travel a lot, a travel rewards card might be a better fit. There is no wrong answer. It all depends on what kinds of rewards will be most useful to you. Ignore credit card offers that don't fit the rewards you're looking for.

Dig into the details of the rewards programs. Look for anything that might limit its usefulness, like caps on bonus categories or expiration dates on travel miles. Compare these to other top rewards credit cards in the same category to see how they stack up. You should also think about how they will fit in with your lifestyle. A travel rewards card with points that expire after one year might not work for you if you only travel occasionally, although this might not bother someone who travels once or twice per month.

Protections

All decent credit cards should offer fraud protection so that you aren't held accountable for any fraudulent purchases made by an identity thief using your card. But some cards also offer other perks, like purchase protection, which will reimburse you for damaged or stolen items that you bought with that credit card. There's also price protection, which will pay you the difference if you find an item you’ve purchased available at a lower cost within 60 to 120 days after you purchased it with your credit card. Some travel rewards cards include travel and rental car insurance, which can save you from paying for these things out of pocket.

These perks don't usually get as much attention as rewards points, but they can be valuable, so weigh these as well as the card's rewards when deciding whether it deserves a place in your wallet. You should also check through the perks and protections offered by the credit cards you already have. It might not make sense to purchase a new credit card for its travel insurance if you already have a card that offers this.

There's no one credit card that is right for every person. It all depends on your shopping habits and how well the new card complements the cards that are already in your wallet. By focusing on the above features and comparing them to those of the cards you already own and other top credit cards, you can decide whether it's worth applying for or not.