Should You Accept That Credit Card Offer

A Credit Article Contributed by Mark Mcclelland

Accept That Credit Card... or Not to Accept

It's been said before, and it bears saying again: accept that new credit card offer at you own financial peril. Sure the offer sounds great, low introductory rate, fabulous cash-back rewards, absolutely incredible credit limit (you didn't know you were so successful did you), and on and on it goes. But have your ever actually read, or even tried to read, the fine print? Bet you you haven't. And you're in good company there as most folks haven't, or they wouldn't be in the financial straits they're in.

Do you have any idea why personal bankruptcies are at an all time high? While you may think those folks are all dummies, they're probably more like you than you imagine... well intentioned, basically honest and hard-working.... but that didn't matter. There's only one basic reason for filing for bankruptcy, and that's for protection from creditors due to too much debt.

The Dangers of Accepting Credit Card Offers

And there you have it, too much debt. That's the real danger of accepting any of those credit card offers that the postman stuffs into your mailbox day after day. Believe this, if you have decent credit the card issuers know that is will do everything they can think of to get you to spend even more of that vanishingly small amount of free disposable income.

Apart from the fact that you probably can't afford it, the offers that come with these cards are designed to make you think that you can do more with less. Let's take a cash-back card as an example. Let's say you receive an offer for to apply for a card that provides 1.5% cash-back on all purchases, period.

Not take a look at the interest rate the card issuers is willing let the card go for... you can bet that its a good 2 to 3 percent, maybe even 4 percent, above an equivalent card that doesn't have any reward program tied to it. Doing the math you can see that the card issuer gets to charge, at the low end, an additional

5% interest on your purchases, and at the high end it's 2.5%. even though they said that the cash-back program gave you "free" money to do with as you please, they really just took an additional half percent out of your pocket.

Some deal.

When to Accept That Credit Card Offer

Are there actually any circumstances when accepting one of those cards makes sense. Absolutely there are some, but not very many.

If you pay off your balances every month so that increased interest rates don't really have much of an effect on you... and then only if the card doesn't have an annual fee associated with it, and doesn't charge a fee if you don't carry a month to month balance.

Also, if have an existing card whose interest rate is higher than the total rate for the new card, you can transfer your old card's balance to the new card and then close the old card's account.... but make sure you close out the old card. That way you haven't increased the number of cards you own and have moved your debt to a lower interest rate, saving you some bucks; but you should use the savings to increase your payments so that you reduce your overall debt load at a faster clip... you'll be happy you did.