The possibility of obtaining a new credit card can be extremely exciting. It can give you a sense of financial security and privilege. However, you must consider several factors before you apply for one. Credit cards come with peculiar terms and conditions, fees and penalties that you should be aware of — ideally before applying.

The following are some common red flags to look for when shopping for a new card:

Interest Rates

Banks decide on the annual percentage rate early in the process. They have different rates for different credit classes. You can find the information on this subject in the terms and agreements section of the contract. Credit card rates can be as low as 12% and as high as 26% or more. A high interest rate can cost you hundreds of extra pounds per year. Please take a minute to review your credit rating and the additional costs before you apply. A variable rate is one that can change at any time. If you see “variable rate” in the credit card terms description, then you may want to avoid applying for such a card.

Fees

Many credit cards are excellent options for consumers. However, some credit cards come attached to a swarm of additional fees that may leave you with little to no money left in the balance. You should be leery of such fees as maintenance fees, activation fees, membership fees, annual fees and the like. The best credit cards will have few additional fees. You can usually find all the fees in the terms. Review the terms thoroughly before you apply for the card. If the credit card company approves your application, then it will expect you to abide by its terms.

One of the biggest credit card red flags is a “processing” fee. Companies that issue these cards charge their customers an upfront processing fee to get the card. The processing fee can range from £35 to £$95.

Grace

Most credit cards give you a grace period during which you can pay your balance with no additional interest charge. You should be leery of any cards that do not offer a fair grace period. With no grace periods, you will immediately have to endure interest charges on all of your purchases. That situation can set you back very early in the process.

Obtaining a credit card can be a positive experience. However, you must be sure to look out for red flags. Additionally, using a comparison tool can help you a great deal. Comparison tools allow you to view the figures for several cards at once.