Compare Credit Cards
There are many, many options when it comes to obtaining a credit card. So many options, it can seem somewhat overwhelming. While there are some websites available online that can help you compare different features from varying cards, the goal of this page is to make sure you know WHAT to compare!
For the most part, a lot of the legal jargon is very similar from card to card, especially with new government rules passed down over the past year. This can give you a little reprieve from the fine print, however we always recommend reading every word before agreeing to any contractual agreements.
There are certain characteristics, features and costs that distinguish certain cards:
- Cash Advance
- Balance Transfer
- Annual Fees
- Monthly maintenance fees
- Over the limit fees
- Balance transfer fees
While the above list is by no means exhaustive, it does give you the basics, including a few examples. These are the areas that you want to pay special attention to. These are the area in which cards can differ greatly, and they can and will have the greatest impact on how much value and benefit you receive from your credit card, as well as your ability to repay your debt.
Below is the same list above, but without the broken down examples. Included, though, are some basic thoughts and suggestions as to what questions you should ask yourself when reviewing these items:
- What types of transactions will you utilize this card for the most? Purchases? Balance transfers? Different transaction types, as listed above, can and often do have different interest rates attached to them. Understand your credit needs, and evaluate the interest rates based on how you plan to utilize the card.
- Is there an INTRO RATE? These “teaser rates” are often very appealing, but are typically only valid for a limited time. After a disclosed period of time, the rate will jump back to a “normal” rate (which is much higher in many cases). If you intend to take advantage of the teaser rate, be sure to pay off your debt before the teaser period expires, as most cards will charge you back interest for the rate difference on any remaining portion of the balance charged at the time.
- Many cards have annual fees. These can be called “Annual Fees,” “Membership Fees,” or any number of other possibilities. These fees are often attributed to cards that are intended for first time card owners or consumers with poor credit. In some cases, the fees alone immediately take up a significant portion of your available credit.
- Annual fees can sometimes be worthwhile if you are attempting to build credit, or re-build your credit after a financial hardship. It may cost you in the short term, but building up good credit is always a very good goal, especially if you have had problems in the past.
- Transactional fees are fees that can be linked to certain transactions, such as balance transfers, over the limit fees, or cash advances (getting cash from an ATM, for example).
- Some cards also include monthly fees, often referred to as “account maintenance fees.”
- All of these fees add up to a higher cost. It is vital to consider all fees when comparing cards, as those fees can take a card that has a seemingly low interest rate and make it suddenly very expensive.
- Also, keep in mind that fees are applied to your balance. They take up your credit limit, thereby reducing the amount of credit available to you. Worse yet, if your credit balance is at or near the limit, fees of any kind (as well as interest charges) can put you over the credit limit on your card, thereby assessing even more penalty fees.
- The specific rewards offered by the card issuer or bank vary from institution to institution, but often are comprised of airline miles, points (which can be “cashed in” for certain prizes), or cash back.
- These rewards based cards do, on occasion, have some added fees (such as those mentioned in the sections above) which no doubt help them to offset the cost of their rewards and keep their profits in check. This is not true for all cards, but be aware that obtaining a rewards card often comes at a cost.
- Rewards are often accumulated based on how much money you spend on your card. For every dollar, for example, you may get one point. The rate of accumulation, as well as the value of the individual rewards units (miles, points, cash, etc), vary with each credit card issuer and/or bank. If you plan to use your card very frequently, the rewards will be of significantly more value to you than if you were to use it very sparingly. If you do plan to use your card sparingly, a rewards card may not be a great option for you, as the benefits of the rewards (if any) may not outweigh the costs that may be associated with your card.
- Credit card processors are companies such as VISA, Mastercard and American Express (AMEX). These companies are the organizations that facilitate the credit card transactions. They ensure that the money transfers from the bank, to the retailer. This is the system that connects all of the pieces together and allow these transactions to take place.
- The main thing to keep in mind here is that not all credit card processors are accepted everywhere. For example, some stores may take only VISA or Mastercard, and not accept Discover or AMEX. This is not an overwhelming occurrence, but it is something to keep in mind.
- Also, rates and fees can be somewhat impacted by the credit card processing companies, as well as rewards. Due to this, you may see vastly different options on a Discover card that you would see on a VISA card.