NEW YORK - Shopping for a credit card is a lot more complicated than it used to be.
That might be a tough pill to swallow if your terms were unfavorably tweaked in the past year and you're itching to take your business elsewhere. You may find other banks aren't clamoring to steal you away.
If you don't believe it, just check your mail. This year, the number of credit card offers sent to households is forecast to sink 60 percent to 1.5 billion, after falling 71 percent last year, according to market research firm Synovate.
"People don't have that option to look at the last five or 10 offers they got anymore," said Ben Woolsey of CreditCards.com, which lets consumers compare cards. "They have less bargaining power."
That said, banks still want the best customers, and even those with spotty credit histories have options. Either way, it's best to do your homework before rashly closing an account or trying to open a new one.
KNOW WHERE YOU STAND
To size up your desirability as a customer, start by checking your credit report.
You're entitled to one free report a year from each of the credit bureaus, Equifax, Experian and TransUnion (go to www.annualcreditreport.com to get started). If your report lists any collections, you can bet your score won't be great.
Your report won't give your actual score, however; you need to pay $10 or more for that, depending on the agency. Or you can go to myFico.com and pay $15.95, which also gets you access to a calculator that lets you see how actions, such as paying off a debt, would improve your score.
If you don't want to pay, you can take a quiz at CreditCards.com to get an estimate of the range you might fall into. Of course, the results might be off significantly since the 10 questions are broad, and you may inadvertently misreport your credit history.
Regardless of which path you choose, your score will generally fall into the categories of excellent (750 or higher), good (660 to 749), fair (620 to 659) and poor (350 to 619).
Getting a new card shouldn't be a problem for anyone with excellent credit. If your credit is fair to good, you can probably get approved for a major bank card, but your interest rate might be as much as 8 percentage points higher than someone with excellent credit. For example, you might be charged a 20 percent APR, instead of 12 percent.
You can probably still get a card with a poor credit score. But expect a slew of fees that might not make it worthwhile. More on that later.
WEIGH THE REPERCUSSIONS
Before you apply, consider whether you might also be seeking a mortgage or car loan in the next year.
Applying for a new card can shave a few points off your score, since it generally gets dinged when your report reflects that you've sought additional credit.
The same is true if you open a new card, since the new account will bring down the average length of your credit history. Just how much your score is hurt will vary depending on your overall profile. The negative impact usually disappears after about a year.
For the near term, however, a difference of just a few points could end up costing you, or determining whether you even qualify for a loan.
"Particularly for a mortgage, every single point is going to count," said Greg McBride, an analyst with Bankrate.com, the consumer financial Web site.
For example, if your score drops from 700 to 690, it could mean the difference between a 4.76 percent or 4.93 percent interest rate on a mortgage. On a $300,000 loan, that would translate to an additional $30 a month.
For the same reasons, be careful about closing old accounts once you get a new one. A little math can give you a sense of how much an account closure might hurt your score.
Weigh your credit limits against your balances to see what percentage of your credit you're using. If the figure drops significantly once you close an account — and the limit on your new account doesn't make up for it — then you're probably hurting your score.
"If it's going to go from 20 to 40 percent, that's significant," said Barry Paperno, a spokesman for FICO, which produces the most widely known credit scores.
DETERMINE YOUR NEEDS
Once you determine that you're ready for a new card, figure out what you want out of it.
If you're prone to carrying a balance, for example, your top priority should be a low interest rate. Also be on the lookout for balance transfer fees; many banks now charge up to 5 percent, instead of the 3 percent fees from a year ago, McBride said. Some banks are also removing the limits on those fees.
If you're trying to budget, you might want to avoid rewards cards. They tend to have higher interest rates, and you might be inclined to spend more under the premise that you're earning points.
If you pay off your bill every month, on the other hand, interest rates have no bearing on you and the world of rewards opens up. All you have to decide is whether you want cash back, merchandise or miles.
Cash back is generally the easiest to understand in terms of the value you're getting, Woolsey said. You might also want to be wary of exchanging points for merchandise, since banks tend to inflate the required points.
For personalized recommendations on a card that suits you, you can punch in your information at www.BillShrink.com or www.Mint.com. You'll need to provide bank and credit card account numbers for the latter option.
Remember that the landscape has changed. Regardless of your credit history, the terms you're offered likely won't be as good as you're used to.
"Card issuers are playing defense, not offense," McBride said. "It's a different environment."
READ THE FINE PRINT
If you've got a bad credit score, one option is a secured credit card.
The catch is that you'll need to put down a deposit equal to the amount of your credit line, and you'll likely be charged a membership fee (around $50) and a set up fee (around $70 to $100). The upshot is that a secured card is a way to rebuild your credit history. After about a year or so, the bank will likely start giving you more favorable terms.
Otherwise, your odds of getting a card with a major bank aren't good if your score is less than fair. And you need to be wary of the unsecured cards available to those with poor credit.
For instance, among the many fees with the First Premier Bank Credit Card are a $29 account setup fee, a $95 program fee and an $84 annual servicing fee. There are also fees for various services, such as a $25 fee for returning an item to a store.
The good news is that the new credit card law going into effect in February will cap many such exorbitant fees. It won't, however, make getting a new card any simpler.