How to Compare Credit Cards?
Is this your first time getting a credit card?
Or perhaps you’re thinking of getting another credit card?
You’re doing the right thing —haggle, peddle and shop around for the credit card that is right up your alley. There are a plethora of credit cards out there and choosing one that best fits you is like finding a needle in a haystack.
To narrow things down for you, here are some useful guidelines in picking out the right credit card for you.
Begin by asking yourself — What do I need to use this credit card for? Is it to pay bills? Buying things? Going on a holiday? Or spreading the cost of a huge purchase?
Whatever your reason is, the important thing to consider is how you will be paying off what you owe on a monthly basis or how much it will cost you with the staggered payment over a given time frame.
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Let’s say you think you are capable of paying the bill in full, it is still best to have a fallback in case you are not able to do so. Now, if you have taken stock of your expenses and concluded that you can pay the bill completely every month, then you can take advantage of free interest within a given period.
Then you can look at credit card companies with cash back incentives. If however, you want to use the credit card for loans and you believe you won’t be able to pay the balance off every month, then consider a card with a low-interest rate.
Always remember to make sure that you can pay off the monthly payment. This is crucial.
Now let’s compare. What is the primary information you should get about a credit card company? Check out the fine print, as they say. Look at the summary box with a standard basis of details or information about the credit card company.
Under this summary box, you should see the interest free period and the interest rate as well as other charges. It’s easier to compare the credit cards side by side with the same information. Most summary boxes have the credit terms including their explanation.
Sometimes, it’s best to employ a credit card comparison website. This will aid you in easily picking out the credit card of your choice. The downside here is not all comparison websites will show all the credit cards and your choice might not even be there.
Here’s a helpful guide of specific items to look for when choosing your credit card.
Check out the annual fee. Most credit card companies impose a yearly fee for the use of their card. This yearly payment is appended to the total money due. Plus you need to pay interest on the annual fee on top of the interest on your purchases. Except when you pay the full amount.
The next thing to check is the APR or the Annual Percentage Rate. The APR is the cost incurred on borrowing through the card, in case you don’t pay the total balance every month. Check out the lowest rate of APR among the cards. Along with this, you will find incentives and other fees and charges.
Speaking of charges, look into the credit agreement and find out what other charges apply to the card. Typically they charge you for late payments, when you use your card outside your country or when you go over your credit limit.
Since we’re talking about limits, compare the minimum amount the credit card company requires you to repay on a monthly basis. This is usually 3% of the balance.
Then you can compare their introductory interest rates. An introductory interest rate is where you don’t pay any interest at all or to a very low rate of interest. The interest rate usually grows after a given time period, usually after half a year.
Check out the introductory rate for balance transfers and find out how long the introductory rate is as well as the interest rate change at the end of a certain time frame.
Compare cashback incentives. Cash backs are money paid back to your credit card, based on the number of your purchases. Sometimes credit card companies may give you a better deal in lower interest rates if you’re a good payer — meaning you pay your balance in full on a monthly basis.
Rewards! Sometimes rewards are called loyalty points. These points increase and go up based on your purchases. You can use the points to purchase other goods in certain shops. Compare how you can earn points and rewards and how they can be used.
Once you have decided, you may check out and compare how the credit card companies decide in giving you credit or even refusing your credit. Credit card companies have the discretion in accepting or refusing you to get a credit card. This is based on your credit score and if you do not pose a risk. Find out your credit score and make sure you have good credit standing.
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