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Why You Should Consider a Credit Card for Holiday Shopping
The holiday season is a time of increased spending, and using a credit card can help you maximize your benefits. At O1ne Mortgage, we prioritize your financial well-being and offer insights to help you make informed decisions. Here are some reasons to consider getting a new credit card for your holiday shopping needs.
1. Introductory Bonuses
Many credit cards offer introductory bonuses when you open a new account and meet a minimum spending requirement. These bonuses can range from $100 to over $1,000. Ensure you can meet the spending requirement with your holiday and everyday expenses to make the most of these offers.
2. Rewards Programs
Credit cards come with various rewards structures, offering cash back, points, or miles. Some cards provide a flat rate on all spending, while others offer accelerated rewards in specific categories like groceries, dining, and online shopping. Choose a card that aligns with your spending habits to maximize your rewards.
3. Interest-Free Promotions
Many credit cards offer an introductory 0% APR on purchases for a period ranging from six to 21 months. This can be beneficial if you need time to pay off your holiday expenses without incurring interest. Just ensure you have a plan to pay off the balance before the promotional period ends.
4. Shopping Protections
Credit cards often come with various protections, such as purchase protection, return protection, and extended warranties. These benefits can be particularly useful during the holiday season, providing peace of mind for your purchases.
5. Credit Building
Using a credit card responsibly can help you build your credit profile. Make everyday purchases and pay your balance on time and in full each month to build a positive payment history and avoid interest. Keeping your credit utilization rate low is also crucial for maintaining a good credit score.
Reasons to Be Cautious About Getting a New Credit Card
While there are benefits to getting a new credit card, there are also reasons to be cautious.
1. Approval Challenges
The best credit cards often require good or excellent credit. If your credit score is below 670, you may have difficulty getting approved, which could result in a hard inquiry on your credit report.
2. Risk of Overspending
If you struggle with sticking to a budget, a new credit card could tempt you to overspend. The additional debt and interest could negate any benefits you gain from the card.
3. Potential Credit Score Impact
Mismanaging your credit card can harm your credit score, especially if you miss payments or maintain a high balance relative to your credit limit.
4. Impact on Other Financing Needs
If you plan to apply for a mortgage or car loan soon, it’s best to avoid opening new credit accounts until after you’ve secured the loan. This is particularly important if your credit score is close to a lender’s minimum requirement.
How to Choose a New Credit Card
If you decide that getting a new credit card is right for you, consider the type of benefits you want, your spending habits, and your credit score.
Choose a Card Type
Common types of credit cards include cash back, travel, intro 0% APR, balance transfer, store, student, and secured credit cards. Store credit cards can be beneficial if you shop frequently at a particular retailer, but they may not offer as many benefits as traditional cards.
Understand Your Spending Habits
Review your spending over the past few months to identify your top spending categories. Choose a card that offers the most rewards based on your spending habits.
Check Your Credit Score
While the best credit cards are typically reserved for those with good or excellent credit, options are available for consumers with fair or bad credit. Know the requirements before applying.
At O1ne Mortgage, we are here to assist you with all your mortgage service needs. Call us at 213-732-3074 to speak with one of our expert loan salespersons today!
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