How Shall I Compare Thee, Credit Card?

Credit cards today are a competitive industry and there is so much more going on with them than consumers may realize. It can be overwhelming to review and research and to even understand what it is you should be looking for in a credit card.
 

Here are some tips to help you weave your way through the credit card maze and choose the best credit card that best works for you.
 

Interesting Interest Rates
The interest rates on credit cards can either be a fixed rate, meaning that the interest rate will stay consistent, unless you miss a payment. With a variable rate, the annual percentage rate will be based on the prime rate so it can go up or down. Essentially, no matter what kind of interest you choose to go with, all credit card companies, by law, can change the rates at any time, provided they give written notice within 15 days of the change. Lower interest rate cards are best for those account holders who carry a balance on the card each month. If you tend to pay your balance in full each month, you may be more concerned about other factors involved in choosing a credit card.
 

Fees Can Bring You Down
Many people do not realize that fees can really ruin a great relationship with your credit card. If you fail to make a payment or are even one day late in paying, you can incur fees that will make paying off your balance even more difficult. There are also fees associated with going over your monthly credit card limit. If you are not able to make a large enough payment to bring your balance down below the limit, the penalties will keep accumulating. In addition to the fees for negative actions, many credit cards charge a annual fee just for having a credit card. If you do not read your disclosure information very carefully, you may be shocked and completely unprepared to deal with the consequences.
 

The Class of Cards
Credit cards come in different classes and depending on your needs, one of the categories may be the best choice for you.
 

·         Standard Credit Cards – These cards have a few incentives that are available to use and the credit limit is not typically as high as a premium card might be. Standard credit cards do not require a down payment of money to establish a credit line, like secured cards do.
 

·         Premium Credit Cards – These are the cards typically referred to as Platinum, Titanium or Gold cards and they offer higher limits of credit to those who qualify. There are also usually more advantageous rewards programs.
 

·         Secured Credit Cards – For people with low or no credit scores, secured credit cards can be a way to build credit. These cards will require a cash deposit into the account to establish a limit of credit.
 

Grace Periods
Believe it or not, many credit card companies have done away with a grace period, the amount of time you have between purchases and paying your bill. Make sure you read the terms and conditions of each card to ensure your card does have a grace period.
 

Calculating the Finance Charges
Every credit card company will utilize a different method for calculating your finance charges on your balance. Make sure you check the conditions for the credit card company’s method of calculation because some formulas will leave you paying much more a month in finances charges than other cards will.
 

Credit Card Rewards
Credit card companies offer rewards programs as incentives for people to open accounts. However, in the past, the rewards programs used to be much more lucrative to the account holder, as in offering double or triple rewards points. Now, with the stringent policies of many credit card companies since the recent crunch, good rewards programs may be harder to come by. Incentives should never be the basis for which you choose a credit card but if you decide to go with a rewards card, select one that will benefit your lifestyle the most – such as the cash back rewards cards.

Related Posts:

• How Does Your APR Compare to the Industry Average? - If you carry a credit card, which most people do, you might be interested in knowing how your APR compares to the...
• Tool to Compare Credit Cards - If you are feeling overwhelmed while sorting through all of the credit card offers out there, I found another pretty nice tool...
• Understanding Your Billing Statement - Do you feel a tad bit confused when you look at your credit card statement? If so, take a look at this...
• Card Issuers Shortening Grace Periods - Most of us focus primarily on interest rates when comparing credit cards, but an important factor to consider is the type of...

This entry was posted on Tuesday, December 9th, 2008 at 3:32 pm and is filed under New Card Offers, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.