If you're going to compare credit cards, you'd better do it
right. The process can be overwhelming and a mistake can cost
you hundreds (if not thousands) of dollars. Want to know how to
do an apples to apples comparison, leaving no margin for error?
Here are the things you need to look for.
Intro APR vs. Fixed APR
First of all, don't take an APR at face value. Sure, you can
apply for that 4.99% credit card offer, throwing the 7.99% offer
into the shredder, but what if that 4.99% rate is just a teaser?
What if it jumps up to 14.99% after a few months? That 7.99%
fixed rate sure would have been better.
Before you apply for any credit card, make sure you know the
details of the APR. Is it fixed? Is it an intro or "teaser"
rate? If it is, what's it going to jump to when the introductory
period is over (and how long with that be)?
A Nickel Here, A Dollar There
Let's compare credit cards A and B in this scenario. Card A has
an APR of 7.25% and it's a fixed rate. Card B is 9.9% and it's
also fixed. Which card do you choose? If you picked card A, slap
yourself on the hand.
Sure, card A might have a lower interest rate but what if the
annual fee is $59 and there's a minimum monthly finance charge
of $5? On the other hand, card B has no annual fee and no
minimum monthly charge. Card B would be the better choice.
A low APR is great, but not if it means high fees. When
considering the cost of a credit card you need to consider ALL
of the costs, not just the APR. Is there an annual fee? If so,
how much is it? Are there minimum monthly finance charges?
What About Grace?
Always compare the grace periods when you try to compare credit
cards. A credit card that offers a grace period of 25 days is
always better than one with no grace period at all. Credit cards
that don't offer grace periods begin charging interest from the
day of your purchase. That money can add up over the years and
it's money out the window.
Remember, on the surface two credit cards can seem similar or
one can seem way better than the other. It takes digging a
little deeper to really see which credit card is better for you.
The next time you compare credit cards make sure you take all
the above factors into consideration before making your choice.
About the author:
For more tips on credit cards, saving money and avoiding getting
taken, check out CreditCardTipsEtc.com, a website that
specializes in providing credit card tips, advice and resources.
http://www.creditcardtipsetc.com.
