What to Know - Before You Apply

Let’s start by stating the obvious: if you’re already in a tight spot financially, credit cards might not be the best choice. The only way to make money with credit cards is to pay off the balance every month. If you’re not financially solvent, adding a potentially high-interest credit card to the mix could be a recipe for disaster.

Before you apply for a credit card, do the following:

• Check Your Credit Score
  Even the best rated credit cards for military members will have astronomical interest rates and low borrowing limits for applicants with low credit scores. According to 'lendedu' 670-739 is good credit, 740-799 is Very Good, and Above 800 is Excellent.  We recommend visiting their article "What is a Good Credit Score" to learn score more about How to Get a Good Credit Score, Benefits, and How Credit Scores are Calculated (payment history, length of history, current debt, new credit, & credit mix types).
  
  Young borrowers or those new to the credit game may first have to put down a deposit to get a credit card.  A great card to start building credit with ZERO fees is the PenFed Promise Visa Card.  Another option is to have a family member add you as an authorized user of their card. Their line of credit history can be reflected on your credit score profile. Overall, the longer you have a credit card – and pay it off – the more your credit score will increase. Over time, responsible credit card use can have a remarkably positive impact on your credit score, which helps with getting better terms on any future big purchases such as a home or car.

• Get Out of Debt
  Many factors affect your credit score, but debt is chief among them. If you’re carrying large amounts of financial debt, pay it off before applying for an additional credit card. This will both increase your credit score and give you the ability to pay off your card every month.
  
  Military members have access to a variety of tools to pay off debt. Military installations offer free financial planning and budgeting courses, and some even provide financial assistance for service members in need. You can also apply for a career starter loan, a low-interest loan of up to $32,000 offered to newly commissioned military officers, cadets, or midshipmen. Military members can use this loan to pay off other debts and increase their credit scores. 

• Avoiding Credit Card Interest Payments

Americans will pay an estimated $122 billion in credit card interest this year. Borrowing more than you pay back is a sure-fire way to end up over your head in credit card debt.

Credit cards can be a valuable source of passive income, but only when you pay them off every month. A $200 cash back perk doesn’t mean much if you’re stuck paying $500 in interest payments. The only way to get the full benefit of credit cards and their incentives is to ensure you pay off your balance without fail.  Credit card companies make money every time you swipe. So even if you never pay a dime of interest (and we hope you don’t), they are still getting paid. Therefore, credit card companies entice customers to use their card more than others you may have by offering extraordinary incentives.

Make a budget and stick to it. Know your monthly income and make sure you’re not charging more than you can pay off. Some cards may offer an introductory 0% interest rate, but those will rise eventually. Don’t get caught in the credit card interest trap.

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• Not All Points are Created Equal

A card that offers 6x the points on a category may not be better than another bank's card that offers 3x the points in the same category.  The real value becomes evident with the redemption and overall rewards program tied to each. Check out this article from Credit Karma to see which incentives are worth your time.  Also, the 'Points Guy' website offers a monthly update of point evaluations. Here is the monthly article and you can see that the American Express & Chase programs are some of the best valued, up to 2 cents per point (depending on how you redeem them).