5 Finance Rules You Need to Understand Before Applying for a Credit Card

5 Finance Rules You Need to Understand Before Applying for a Credit Card from North Carolina Lifestyle Blogger Adventures of Frugal Mom

There’s a lot more to applying for a credit card. While you may think it’s as easy as applying and swiping, there are certain rules you’ll need to follow when applying for a zero APR credit card or any other type.

Without understanding how credit cards work, you could end up making a costly mistake. When used improperly credit cards can lead to a damaged credit score, high fees, and interest charges. Keep reading to learn about the 5 financial rules you’ll want to understand before applying for a credit card.

1. Understand Your Financial Standing

Your financial situation will have a huge impact on the type of credit card that’s most ideal for you. If you have a lot of credit card debt, you want to find a card that offers a low or no APR along with a low balance transfer fee so that you can consolidate your debt onto one card. This makes paying off your debt much more manageable and effective.

If you’re applying for your first credit card, it’s best to consider a secured credit card. Though these credit cards require an upfront deposit, lenders typically have high approval rates for secured credit cards, making them ideal for someone who doesn’t have a lengthy credit history yet.

By knowing how you stand financially and why you want to apply for a credit card, you can choose the best type of credit for your situation.

2. Pinpoint Your Spending Habits

Just as you should have a clear idea of your financial situation, it’s also important to be honest about your spending habits. How you use credit cards will also influence the type of card that’s best for you.

Let’s say you have a large family and are responsible for groceries. This means you’ll want to find a card that offers grocery rewards so that you can save money on the items you buy most. If you’re a commuter and drive a long way to work each day, find a credit card that has a gas rewards program. If you travel often overseas or on vacations, find a card that has an airline miles program.

You’ll also find that there are credit cards that offer cash back and discounts when buying from certain merchants. By knowing your spending habits, you can find a card that rewards you for simply buying! This is a perk of having a credit card that makes them well worth it.

3. Know When You Last Applied

Applying for any type of loan or credit too often can impact your credit score. If you’ve applied for a loan or credit card within the last six months, you’ll want to hold off on applying for a new card. Applying for loans and credit too close together can have a huge impact on your credit score.

Your FICO credit score is determined by many factors, including new credit. New credit makes up 10% of your score. Opening up too many credit accounts in a short time frame will decrease your score. New accounts also impact your average account age.

4. Thoroughly Read the Terms & Conditions

No one really likes to read the fine print, but reading the information within the Cardholder Agreement document is a must. This document provides all of the terms and conditions of the card, to include APR, fees, and other important details. By knowing what’s in the agreement, you can avoid any unwelcome fees as a cardholder.

When reading the Cardholder Agreement, the first bit of information to look for is the APR. This is the yearly cost of using the credit card. The lower the APR, the better, as this means you’ll be spending less towards interest on your purchases.

Another detail to be aware of is the grace period. This is the length of time that you have where you can pay the entire amount charged on the card and avoid paying interest on that amount. Knowing your grace period can save you hundreds of dollars.

Other details to be aware of include:

  • Minimum monthly payment
  • Annual fee
  • Transfer fee
  • Late fee

By knowing the ins and outs of your credit card, you can avoid making a mistake that may cost you money, such as paying late or paying outside of the grace period.

5. Research Your Options

Applying for a credit card can be exciting, though choosing the wrong credit card can have a serious financial impact. Instead of choosing the first card you find, take the time to compare cards and choose the one that’s a great deal and a match for your spending habits and other personal needs.


By following these 5 rules when applying for a credit card, you can ensure you’re making the best financial decision.

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