If you’re like me, chances are your mailbox is flooded with credit card offers that sound too good to be true. Credit card companies are known for tempting us with juicy offers and sometimes we take the bait. Unfortunately, some cards that sound too good to be true probably are. Don’t let the bright red, bold lettering fool you.
The good news is you can sort out the good from the bad by reading the disclosures. Here are some credit card company tricks consumers need to know about:
Pre-Approved. Once opened, you might be excited to find you’re “pre-approved” for a new credit card. Unfortunately, being “pre-approved” doesn’t mean squat. You still have to meet the criteria required by the card company—meaning your credit score and credit history will ultimately determine whether you are approved.
Catchy Credit Card Lingo. Credit card companies are great at marketing their products. They use the names of adored metals like Gold, Silver, and Platinum to make their cards shine and stand out. They use words like “Important” or “Confidential” to catch your attention and heighten the urgency. But such lingo shouldn’t convince you to rush into getting a card without closely looking at the terms.
Not-So-Low Rates. It's tempting to go for an offer that has amazing rates—sometimes so amazing that you wonder how you ever received the offer. The truth is: The best rates only go to those with the best credit. This is the reason why you might apply for the card, only to be disappointed when you don’t receive the great rate that was plastered all over the offer.
Big Bonus Offers. Many cards offer big bonus offers as a way to draw you. You might see offers that give 25,000 points or free airline tickets for becoming a member, but know there’s always a catch. Typically, you have to spend a certain dollar amount before you are awarded the bonus. For example, you may have to spend $1,500 within the first three months before you get the free airline ticket.
Cash Back Offers. If you play your cards right, you can save money with a cash back credit card. However, you need to know how the rewards program works. Don’t be surprised to find out there are limits on how much you can earn. That 5 percent cash back offer sounded pretty good until you find out the spending limit is $1,500, which means you only earn $75 cash back.
The best way to approach a credit card offer is to read the fine print. It’s not the most exciting read, but it’s a necessary step. Banks are legally required by federal law to present consumers with all the details in an easy-to-read format. Being unsure of one of the terms may be a sign you shouldn’t apply for the card.
Michal Cheney is a frequent contributor to Go Banking Rates, Credit Card Offers IQ, and Dough Roller, where you can find the best credit cards for 2013.