Credit Card Comparison
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If you want to make a credit card comparison to find the best one to suit your needs it is important that you have a clear understanding of the key features and terms.
While credit cards can be a quick and easy source of cheap or free credit if handled correctly, they can also be a very expensive luxury if you do not keep your discipline. Here we set out the key features and warn you of some of the potential pitfalls before you make your credit card application.
Credit card types
When you begin to research the credit card market you’ll find that there is a huge choice of products tailored to suit certain people and certain circumstances. You will find cards for students, people with bad credit ratings and no annual fee credit cards, to name a few. While these may have some features that appeal, it’s best to take a closer look before making any credit card application.
Annual Percentage Rate (APR)
APR is the rate of interest you pay on any outstanding balance and is a major factor in how much your credit card will cost you. This is one of the most important factors to review when doing a credit card comparison. Typical APR could be anywhere from ten to twenty percent interest per year so choosing a low interest card is essential if you can’t afford to repay bills in full each month. It could save you hundreds of dollars. Also, when comparing credit cards watch out for deceiving introductory APRs. These low rates will only last a few months, it is the normal rate that you will be paying after that which you have to compare.
Grace period
Almost all credit cards allow a grace period between when your monthly bill is issued and when you have to make a payment to your credit card account. If you have a grace period of 28 days you could get almost two months between making a purchase and the repayment becoming due. If you pay your credit card balance off in full by the due date on each invoice you can avoid interest charges. The grace period a very useful feature of credit cards so don’t settle for anything that offers less than the standard 28 days.
Interest Rates and Charges
If you know you won’t be paying your card bill off in full each month you need to know how interest is calculated. Different cards use different finance charges and some will cost you more than others. They include: Adjusted balance, average daily balance, daily balance, ending balance, double billing and previous balance. The cheapest calculation method is the adjusted balance method but most issuers use the average daily balance method.
Fees and charges
When making a credit card comparison, fees and charges can make the difference between a great deal and a terrible deal. With the right choice of credit card and a bit of know how, you need never pay a cent. However, other cards will hit you with surprise charges such as annual fees and registration fees, and penalize you if you are late with payments or exceed your credit limit. Read the small print and be aware of all fees and charges before you fill out your credit card application.
Rewards
Many credit cards offer rewards for using your credit card, such as cash-back, discounts and free air miles. Rewards and privileges should not be the only factors you use to select a credit card for your needs.
Editorial by Richard at creditcardapr.com.sg.com.au
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