It doesn’t matter if you’re applying for your first credit card or have many years of experience using this financial tool, it’s critical to take the necessary steps to protect yourself.

The best thing you can do is review the terms and conditions of a credit card before completing the application. This will give you a clear idea of what you’re getting, what you’re not getting, the benefits, and the potential drawbacks.

Here are some of the more important questions to address:

  • What is the interest rate? The answer to this question will give you a clear idea of if the credit card issuer is trying to take advantage of you. Although there are regulations in place to keep rates in check, it doesn’t necessarily mean you’re getting what you deserve.
  • Can your interest rate change? Don’t assume that your credit card has a fixed rate attached to it. If it’s variable, you may find it changing more often than you would like. Also, there may be reasons why your issuer can increase your rate, such as if you miss a payment.
  • Do you understand the fee schedule? There are fees attached to every credit card, so make sure you know when these come into play. For example, a late fee is charged if you fail to make the minimum payment by the due date. Foreign transaction fees are charged if you use your credit card out of the country. When you understand the potential fees, it’s easier to avoid paying them.

Unlike a loan shark or payday lender, credit card companies must comply with many federal regulations. While this protects you to a certain degree, you could still find yourself stuck with a card that’s not in your best interest.

What process do you follow to review the terms of a credit card before applying? Would you add any other questions to the three above?

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