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Top 5 Questions to ask a Credit Card Company Before Applying

Ted Levin

June 03, 2014

For the small business owner and the regular guy or gal on the street, having the right credit card is all the more important in today’s financial world.

While the individual without a small business uses their card or cards for purchases such as home supplies, trips, entertainment etc. the small business owner is different.

While they may need the card to buy products and services for their company, they also are looking for the right card company to do business with so they can accept credit card payments from customers. When not choosing the right credit card provider, small business owners can feel the sting financially.

If you are shopping around to open up a credit card account, it can be easy to be enticed by all of the promotions and rewards programs that many card providers promote.

But while these benefits and perks are tempting, they aren’t giving you enough information to be able to choose the best credit card for you.

Before you fill out any credit applications, make sure to ask these questions to get a better idea of which card will be right for you.

1. Are there annual fees? You typically won’t see this unless you are looking for rewards credits cards, but they will be there. Before you disregard any card with a fee, however, consider what you will use the card for and what the rewards are. In some cases, the rewards pay for the fee, so you ultimately get what you pay for, and then some. Still, don’t wait to be shocked by the annual fee charge; find out before you sign up. “Don't choose a card just because it offers a signup bonus or because it gives you a discount at your favorite store,” says Chris Mettler of CompareCards.com. “Read the terms and conditions and understand the card's limitations.”

2. What are the penalty APRs? Just about every credit card will have a regular APR for your purchases, which if you don’t look closer at the terms of the card, could haunt you later on. Look to see if there are late penalties, or credit limit penalties that affect your APR. You’ll find some of these penalties as much as 10% more than the annual APR.

3.  What are the finance charges? Most lenders calculate finance charges using an average daily account balance, which is the average of what you owed each day in the billing cycle. These charges can add up very quickly so it is important to know and understand them. Different companies will calculate this differently (i.e. an adjusted balance that subtracts your monthly payment vs. previous balance), so find one that will charge less to save money in the long run.

4. Is there fraud protection? Perhaps more important than the credit limit and the rewards available through the credit card, you should find out the security and protection behind the card. It’s getting easier for credit card information to be stolen, so you want to have some plan in place to ensure your safety. Ask what protection is available and what the company protocol is for fraudulent charges. You definitely don’t want to be penalized for these charges, so make sure they are covered before you get stuck with them.

5. Are there reward options, and if so, when are they revoked or reduced? Naturally, when there are rewards involved, there are also repercussions. Ask the different credit card providers about their rewards programs. You want to have an idea of the entire program: the good, the bad, and the ugly. In addition to the rewards themselves, find out about any fees and penalizations associated with the program.

The more questions you ask, the better you will understand about the different credit card options available.

Having a good idea of these different features and charges will ultimately help you to take control over your finances and keep your credit score high, whether running a small business or not.

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