June 13, 2016

What to Look for in a Credit Card if You Have Average Credit

Simple. Thrifty. Living.


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According to credit reporting bureau Experian, the average credit score in the United States is 687, with the range of possible scores running from 330 to 830. If you have a 687 score, then your credit history is “fair,” which is nothing to sneeze at. Such a score paves the way for loans such as mortgage loans with decent interest rates. Although you might have a few minor debts in collection or other small blemishes on your history, you are in good shape. As you shop around for a credit card, here’s what to look for. 

In ideal scenarios, interest rates (annual percentage rates, or APRs) would not matter because you would pay your balance due every month in full. However, because this is not realistic for many people, always consider at least three credit cards, and compare their interest rates. It’s common for credit card interest rates to vary anywhere from 11 percent to 23 percent, with 0 percent introductory interest rate offers for one year. Some rates are variable, meaning they could change when economic indexes do. If you opt for a variable-rate card, be sure you understand the factors that trigger a rate change, how often a change can occur and the caps on how much a rate can change.

There are a few fees to consider as you shop for credit cards. First, there’s the annual fee. This equates to a membership fee, and might be paid monthly instead of yearly. Next are the late-payment fees that you pay past the grace period. Warning: The grace period often does not apply if your balance is not paid in full and in cases of balance transfers and cash advances. Another fee to consider is if you go past your credit limit. Also, check to see if you are assessed a fee if you do not use the card. If someone makes unauthorized charges, you may also be liable for fees of up to $50.

According to Experian, credit card issuers are giving consumers lower credit limits than before. With an average credit score of 687, your credit limit might typically be about $5,300. However, consumers with scores of 601 to 660 are getting credit limits of about $2,300. With a 780-plus score, you could expect a higher limit of about $9,500.

Whatever your credit limit is, try to use as little of it as possible. This keeps your credit utilization rate in check and helps keep your credit score in fair standing, or better. Aim to use no more than 30 percent of your allowable limit.

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