Comparing Credit Card Offers
It is no secret that credit cards are a very important piece of financial stability to the average American consumer. With that said, it is quite surprising to me that there are not too many tutorials out there to help people with the process of comparing credit card offers. Below, you will find the key points that you should compare in each credit card offer that you find interest in. The one that wins through all of these comparison points should be the credit card that you apply for!
Credit Card Interest Rates
The first thing to compare when it comes to finding the best credit card for you are the different interest rates being offered. Credit card interest directly reflects the cost of borrowing using the new account. Therefore, lower interest rates mean that you will pay less to borrow money while higher interest rates mean that you will pay more to borrow money. So, you really want to go for the low interest rate offers. Also, it is important to remember that there are different types of credit card interest rates and each type will be allocated to a different part of the balance. Here are the different types of credit card interest rates:
- Promotional Interest Rates: Promotional interest rates are also known as bait rates. This is because these are very short term low interest rates used as a promotion to attract new consumers to the credit cards. These interest rates are usually 0% and usually last anywhere from 6 to 12 months. Remember that promotional interest rates should not be your basis for a decision to apply for a credit card. These interest rates are increased at the end of the promotional period.
- Standard Interest Rates: Standard interest rates are the rates of interest that will be charged to all balances accumulated through general purchase. This is why it is also known as the purchase interest rate. It is also the interest rate that the balance transfer balance will be charged once the introductory period expires. It is considered to be the most important interest rate on a credit card and it is in your best interest to look for a low one.
- Cash Advance Interest Rates: The cash advance interest rate pretty much speaks for itself. This is the interest rate that will be charged to balances acquired through cash transactions. Cash transactions include ATM withdraws, cash back transactions in stores and any money transfer such as a Western Union wire. The cash advance interest rate is generally higher than the standard interest rate.
- Default Interest Rates: Finally, we have default interest rates. Default interest rates are generally the highest rate of interest on a credit card; and for good reason! Default interest rates are only charged when consumers default or do something wrong in some way. This includes things like paying March 16th when your payment was due February 3rd and spending $3,000 when you only have a $2,500 credit limit. By using credit cards properly, you can avoid the default interest rate!
Credit Card Rewards
The next thing that you will want to compare when looking for the best credit card offer for you is the rewards offered. Credit card rewards are the big HUURRRAAAHHH of the credit card industry. They were born as a result of incredible competition with other lenders. These days, there are rewards programs that offer consumers just about everything! When comparing credit cards, it is important to choose one with a rewards program that you will use. By using the rewards programs, the price of borrowing is reduced to you! Here are the general rewards categories that you will find:
- Skymiles Credit Card Offers: Skymiles credit cards also known as travel credit cards are specialty credit cards that offer consumers the ability to earn points also known as skymiles with each purchase. These points can be saved for certain periods of time and later redeemed for great travel rewards such as free round trip airfare and checked bags! When comparing skymiles credit card offers however, it is important to make sure you choose a card that offers few or no blackout dates and is representing a well respected airline.
- Cash Back Credit Card Offers: Another great rewards category being offered by just about every credit card lender out there is cash back rewards. Cash back rewards are self explanatory aren’t they? As with skymiles credit cards, using cash back credit cards consumers will earn and save points with each purchase. However, the redemption offers are a bit different. Instead of redeeming their points for travel rewards, cash back rewards cards customers will redeem their points for cash. Also, many times, the lender will offer more money per point if the consumer chooses to take the money on a store gift card!
- Balance Transfer Credit Card Offers: Another rewards credit card that consumers often run across is called a balance transfer credit card. Balance transfer credit cards reward consumers not through points but through the ability to use them to pay off other high interest credit cards at very low promotional interest rates. Often cases, balance transfer credit cards will offer consumers 0% balance transfer interest rates for 12 months!
Credit Card Terms
Finally, when comparing credit cards, it is important to get into the fine details of the terms of the offers you are interested in. There are a few other things that you will really want to pay attention to when comparing credit card offers in the terms than the interest rate and rewards. Below you will find a few key points that you should make sure to check every time you compare:
- Annual Fee: A fee that is commonly overlooked by credit card new comers is the annual fee. Annual fees on credit cards are just that, they are fees that are charged once per year for the ability and privilege of carrying the credit card. Generally annual fees range from $35.00 per year to $150.00 per year however, some credit cards will have much higher fees. It is important that before you apply for any credit card, you are aware of and agree to the annual fee that you will be charged!
- Grace Period: Another commonly overlooked factor in the terms and conditions when comparing credit card offers is the grace period. A grace period is the period of time that the lender gives to the consumer from the date of purchase before the first interest charge will take place. The reason this is important is that the longer you have before you are charged interest, the better chance you have of paying for the purchase before paying an extra dime. When comparing credit cards you should always look for a grace period that is 21 days or longer.
- Other Fees: OK, so I know a bit about credit cards. I will not claim to know it all. With that said, on every credit card terms and conditions page, you will find a section called Rates & Fees. I would suggest reading this part very, very carefully!
Editors Choice Credit Card Offers