Comparing Credit Cards

A credit card is just like any other bigger purchase: the person will use it for years and people usually want a good deal when they purchase some goods which they will use for a longer period of time. The best thing to do in this case is to compare the prices, the offers and choose the best one. It is not different in case of credit cards: there are many credit card providers and there are even more offers, designed to suit a certain group’s needs. This is the reason it is worth it to compare credit cards before choosing one. What are the guidelines a person should think of when it comes to choose between two great offers? What makes a difference between two credit cards which are very much alike?

A person should basically look out for the following: the annual percentage rate, or APR, balance transfer, low rate, low credit score, cash back and rewards. These are the six main types of credit cards, and each and every one of them has something which differentiates it from the others. This means that before choosing a credit card, a person should think what he wants to do with the credit card, and compare the offers according to his needs.

When thinking about a credit card, one of the most important things to check is the annual percentage rate. In other words, this is the interest rate the credit card provider calculates on purchases. Most of the credit cards have an interest free period, which is usually 59 days (but this may also vary depending on the credit card provider), and those people who manage to pay back their debts within this period of time, should not be worried about the annual percentage rate. People who usually cannot pay back all their debt by the end of the interest-free period, should consider a credit card with a low annual percentage rate, or should try at least to pay back a most of the debt by the end of the interest-free period. Most of the providers offer an introductory interest free period; this varies between 3 months to even 9 months. Besides the APR there are other things a person should pay attention to.

Bad credit credit cards are available for people with a low credit score. They can apply for a credit card, but they should be prepared for a higher APR rate, because the credit card provider wants to make sure he will get the money back, and because the client already had credit problems, this seems to be the only way to be assured. Although these credit cards come with a higher APR, they still have an interest-free period, so if the owner uses the card wisely, he can avoid paying interest to the provider. In this case the lowest interest rate is around 18 %, but it might go as high as 39.9%.

Those people, who intend to use their credit card for balance transfer, should check the fee for transferring their balance. This fee is usually lower in the beginning, but may rise after a certain period of time. The best offers are the ones where the fee is quite low, under 3 % for at least 16 months. But there are credit cards where the balance transfer fee will not change in time; in this case it is worth it to choose a card where the fee is less than 4 %, this way the owner can save some money.

There are a few credit cards which come with extra benefits: cash back or several types of rewards. These types have an annual percentage rate which varies highly from about 15 % to even 50 %. People who use these credit cards are usually able to pay back the used amount of money; they choose these cards for the rewards. The cash back credit card works really simple: by using the credit card the person accumulates points; these points are converted into money at a given rate, and after three months or sometimes six months the client will get the cash on his bank account. A very good offer is when the bank gives back 5 % of the money for three months, and 1.25 % thereafter. Some other offers use points, where 1 $ spent is 1 point, and 5000 reward points equal $20 cash back. By using a card which offers a reward the points can be converted into miles (and so the client can buy cheaper airline tickets), or the owner of the credit card gets a discount at given hotels and restaurants.

These are the main credit card types, and an outline of the offers. But people can be categorized like this too: people who always clear their balance, people who cannot afford to repay their balance in full and people who have outstanding debt. These three types of people need different types of credit cards. For the first type of person the interest rate is irrelevant, since he always manages to repay the amounts during the interest-free period. These people should choose a credit card which offers some kind of reward. People who cannot repay their balance in full should look for a low interest credit card, this way it will be easier to repay their debts. Finally, people who already have an outstanding debt and want to get rid of it should choose a credit card which offers an introductory interest-free period on balance transfers, and they should try to repay as much of the debt as they can during this period. Doing this will make the debt smaller, and it will be easier to get rid of it entirely.

Different types of credit cards are designed for different groups of people: the offers vary highly, the annual percentage rates vary too, so a person should consider his needs before he decides upon one credit card. Choosing the wrong credit card can take people in debt, and credit card debt is an unpleasant thing. To avoid this unpleasant situation people should choose the credit card which best fits their needs and they should use it wisely.