The confusing maze of credit card offers can give you a headache especially when you are trying to decide which one to apply to. What with low APR, no annual fee to rewards cards to cash advance fees it is amazing that it is even possible to compare the credit card offer.
The first step in comparing credit card offers is to decide what is important to you and how you use your card. Ask yourself these four questions to get started.
* Will you always pay your bill in full every month?
* Are the possibility of rewards (cash back or travel miles) important to you?
* Are you going to use your card for cash advances?
* Are you going to carry a balance from month to month?
Once you have the answers to these questions you have a reference point for the credit offers to compare. Some credit card offers are better for one type of person and others for another type of person. The items to look at are APR's both percentage and types, how the finance charges are calculated, the fees that are charged and under what circumstances and what the cash advance features are including access, APR, fees, limits, and how payments are credited.
What are APRs?
Actually a credit card offer usually has more than one APR. They often have an APR for purchases, another for cash advances, and yet another for balance transfers. Look for tiered APRs where different interest applies to different levels of balance on your credit card or penalty APRs which kick in if you are late with your payments. Introductory and delayed APRs are also popular credit card offerings.
Fixed or variable APR
Credit cards differ in the way they determine the interest you pay on the money borrowed. With a fixed APR the interest stays the same or at least does not change unless the issuing bank changes the rate. This does not happen with out written notice. Variable APR is usually tied to the prime rate or Treasury bill rate. It will fluxuate depending on the where the prime rate or Treasury bill rate is at a given period of time.
How long is the grace period?
The grace period is the number of days you have to pay your bill in full without triggering a finance charge. If you carry a balance on your card you might not have a grace period each month.
How is the finance charge calculated?
Credit card companies use a number of different ways to calculate your outstanding balance and which method they choose can make a big difference in the finance charge you'll pay. Your balance may be calculated over one or two billing cycles, using the average daily balance, the previous balance or including or excluding new purchases.
Depending on the balance you carry on your card and the timing of purchases and payments your finance charge will be lower with a one-cycle billing.
What are the fees?
The items to look out for are annual fee, cash advance fee, balance-transfer fee, late payment fee, over the credit limit fee, set up fee, return item fee, or other fees such as paying by phone.
How much is the credit limit? Determine how much you are going to need to accomplish your credit goals. The credit limit of your new credit card offer is the maximum total amount you may charge on your credit card. This amount includes purchases, cash advances, balance transfer fees, and finance charges you will pay a big penalty if you go over the limit.
Remember when choosing a credit card offer to apply to that the terms and conditions of the offers can vary widely. Take into account your spending habits when applying for a credit card offer. Apply to the right one can save you hundreds in fees and finance charges over a years time.
Jim Banks has been helping consumers compare credit card offers for years. In late 2006 Jim decided to put all his research in one spot, http://www.CreditCardMonitor.Org. For a side by side comparison of the various credit card offers by benefit type, credit card issuer or rewards type visit http://www.CreditCardMonitor.Org