Not all credit cards are created equal, so it’s important to compare credit cards to make sure that you’re choosing the right one for your needs. It can be confusing to know how to compare credit cards, especially if you’ve never taken the time to do so before. Here are some things to consider.
What Do You Want from Your Credit Card?
There are various types of credit cards, so you need to think about what you’re looking to get from your choice and pick the right card for your needs. You also need to factor your money management into this. For example, do you make a point of paying off your balance in full every month? If you do, you’re not necessarily going to be after the same type of credit card as someone who is regularly carrying a balance over to the next month.
Credit Card Interest Rates
There are three interest rates to be aware of:
- Balance transfer fees and interest rates which apply to debt being carried over from another credit card
- Purchase interest rates which apply to purchases made using the credit card
- Cash withdrawal interest and fees which apply to cash withdrawals made using your credit card at ATMs.
Many credit cards have introductory interest rates which revert back to the regular rate after a certain amount of time, so it’s important to check whether this is going to be the case. If you’re not necessarily intending to use your credit card straight away, look for one that is offering a low interest rate all the time, rather than one which only has low interest for a certain time period.
Interest Free Days
How long a time will you have between making a purchase and needing to pay for it? Typically, it is somewhere between 30 and 60 days. If you’re confident that you’ll be able to pay off your balance relatively quickly, a credit card like this may allow you to budget your spending without incurring extra credit card charges such as interest and fees.
Not all credit cards may have an interest free period on new purchases, though. There may be higher fees and interest rates on credit cards that offer a longer payment period but if you always pay your balance before it incurs any interest, this shouldn’t affect you.
Credit Card Fees
Some credit cards have an annual fee, which isn’t always a bad thing. Some credit cards that charge an annual fee may come with more attractive interest rates, or more appealing rewards, so don’t dismiss them out of hand.
Other fees to look at are cash transaction fees if you use your credit card to make cash withdrawals, and foreign transaction fees if you may be using your credit card abroad at any point. Watch out for any other credit card fees or charges, which won’t necessarily be prominently advertised. You should be able to find the small print on the credit card provider’s website or other documentation.
Credit Card Rewards
If you’re in the habit of using your credit card regularly and paying off your balance in full every month, interest rates are less of a factor, and you may be more interested in a credit card that rewards you for using it. However, rewards credit cards may have higher interest and fees attached. Rewards can come in a variety of forms, but points can often be redeemed for goods or air miles. Check if there are any restrictions on using these rewards.
Credit Card Fraud Protection
Check also whether your desired credit card offers protection against identity theft. Credit card fraud is becoming more and more common these days, and you’ll want to know that your credit card company will help you get things straightened out if you’re affected.
If you’ve never previously taken the time to compare credit cards, it’s definitely worth the effort to make sure that you’re choosing a credit card that suits your needs. Going for the wrong type of credit card may mean that you end up paying more in interest and charges in the long term. Think carefully about your typical approach to money management and let that influence the type of credit card that you opt for.
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