Comparing Credit Card Offers

Not a day goes by where I don’t receive at least one solicitation for a new credit card.  If your mailbox is as full of these credit card offers as mine, you’ll want to know how to compare the various offers to determine which offers you the best deal.

No two credit card offers are the same so let’s take a close look at some of the key factors that distinguish one credit card from another.

APR

The Annual Percentage Rate determines how much interest you will pay on any balance you keep on the card.  The higher the APR, the more you pay.  The interest rate can vary wildly depending on the type of card as well as your credit history and score.  Keep in mind that a low rate today can turn into a much higher rate if you miss a payment or two.

Introductory APR

Many cards offer an introductory interest rate where the rate you are charged is much lower than normal (often as low as zero) for a period of time.  A great introductory rate can save you a lot of money in finances charges, but you need to be prepared for the rate to increase when that initial period is over.

Rewards Structure

Does the credit card come with a rewards program?  How many points is each dollar you spend worth?  How many points do you need to accumulate to earn a reward?  What kind of rewards are available?  Can you use the points anywhere or only at a specific place?  Do points expire?   These are all questions you should ask when comparing credit card rewards programs.

Fees

Some credit cards charge an annual fee while others don’t.  The annual fee alone can cost you around $75 to $100 per year.  If the card has a rewards program you have to keep in mind that any annual fee will eat into the rewards earned by your purchases.

Balance transfer fees will typically run you around three percent of the amount transferred so you have to factor that into your decision to transfer a balance to the card.  Cash advance fees are charged when you use your card to take out cash.  There are also fees charged when you make a late payment or go over your limit.

Summary

There are so many different credit cards out there that you can surely find one that is right for you.  Of course, you also have to think about your own spending habits and how you plan to use the card.  If you already have large balances on other cards and you’re looking to save some money on finance charges you’ll want to pay close attention to balance transfer options and introductory interest rates.

On the other hand, if you always pay your balance off as soon as you get the bill, the interest rate doesn’t really matter.  Instead, you’d be looking for a good rewards credit card that lets you earn points which you can redeem for cash or other rewards.

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