Promotional Offers for Credit

How many times have you been offered the opportunity to apply for a credit card?  If you’re anything like me, it seems like anytime I make a purchase at a retail store, there’s a credit card to be recommended.  And they all seem to be offering great deals if I apply, such as 0% interest for six months!  But wait – are these really such great savings?  Well, it depends.

The major question to ask yourself is whether or not you can repay the balance in full within the promotional period.  If not , in most cases, you’re going to be charged the accrued interest, which can eat up any savings you thought you were getting.  In addition, your interest rate will likely increase once the promotion has ended, which can make paying the debt off even more troublesome.  So, before you apply, find out when the promotion expires and what the future interest rate could be.  This can help you to plan and determine whether or not you’re getting the deal you thought.

Another area of concern is that, while these offers can certainly be tempting, they have the potential to cause harm to your credit score.  That’s because every time you apply for credit, whether you’re approved or denied, an inquiry will appear on your credit report.  An inquiry simply means that a company has reviewed your credit report because you’ve applied for credit.  Too many of these inquires can possibly negatively affect your credit score.  So, if you’re thinking about applying for numerous credit cards in hopes of taking advantage of promotions, try to limit the number you apply for or your credit score could pay the price.