Credit Card Comparison – What You Should Look For

If you’re about to embark on doing some ‘credit card homework’, you may be overwhelmed at the choices available. There are so many companies to choose from, and with all of them competing for your business (which you should read as ‘money’), it can be a daunting task, at best.

There’s more to consider than just what interest rate they’re charging. While certainly it’s an important factor, it’s not the only one. There are other elements that you should look at to determine which card is right for you.

Let’s start with annual fees. It’s not clear why people would pay for the privilege of owning a credit card, but obviously some do. If you’re considering a credit card that charges an annual fee, at least make sure you’re getting something for it, either cash back for purchases made, or airline miles or something.

Some credit card companies charge the annual fee if you don’t have a balance on the card. This is to keep people from getting the card and not using it. You can usually get around this by making a couple of small purchases each month and paying off the balance every month. But if you want a credit card just for emergencies, which is not a bad idea, be sure to look for one that won’t charge you for not using it.

What about rewards? Many credit cards, in an effort to lure you into applying with their company, will offer rewards as incentives. The rewards vary between companies, but airline miles, cash back, and gift cards are among the most popular. Today, gas credit is becoming an enticing reward for applicants, especially for those who travel frequently or have a long daily commute to work.

Be aware there’s no such thing as a free lunch. If the card company is offering ‘rewards’, you can bet they’re getting something in return. And they are. Every month you don’t pay your balance in full, they’re making enough from the interest they charge to compensate themselves for the rewards they give out. It is, after all, a ‘billions of dollars’ a year business.

Then there’s the biggie – the APR, which stands for annual percentage rate. In plain terms, it’s the interest rate you’ll pay on any outstanding balance you carry over from one month to the next. Don’t be misled by the promise of 0% or 8% interest on a credit card. Those are almost always introductory offers with a defined length of time to be valid. When the time is up, the interest rate can jump to 16, 18, 22% or more!

The most important thing to remember when considering the interest rate is this; regardless of what they ‘say’ or what they advertise, the best way to find out exactly what you’re getting into is to carefully read everything before you sign anything. Yes, it takes longer, and yes, it’s boring and sometimes hard to understand, but you absolutely must take the time to read it all, especially the fine print. Whatever you don’t understand, keep asking until you do.

By knowing what to look for when doing credit card comparisons, it’s easier to decide if you’re getting the best deal possible for your particular needs.