For consumers, the tool could lead to better decision-making about where to apply for credit, which will help reduce the odds of a credit-dinging turn-down. "We want to help consumers set expectations around credit limits," said CreditKarma.com CEO Ken Lin.
The tool allows users to sort cards based on various criteria, including average approved credit score, average credit limit awarded, average household income, average cardholder age and the average user rating. Using the filters, it becomes easy to see what card best fits a borrower's profile.
"The No. 1 thing to look at is average credit score and approval," says Lin. "The biggest mistake is that people look for one that looks good on paper with big rewards or [a] high limit, but then you apply and get declined." That starts a cycle of applications and declines which can hurt your overall credit score, warns Lin. He advises finding a card where other holders have a similar credit score to yours. For example, if your credit score is 650, don't shoot for a card like American Express, where the majority of customers have over a 700.
Another trap for credit card holders is failing to re-evaluate their cards when their needs change, and ignoring the latest offers. "Credit card companies rely on consumers' laziness," says Lin. People get comfortable paying a certain amount, he says, and the hassle of applying for a new card can cause them to miss out on saving up to thousands of dollars. Other sites like BankRate.com and CreditCards.com also offer credit card comparisons.