How to Compare Credit Cards

This article outlines some of the steps you can use to compare credit cards. With so many offers and incentives available, what is the best way to compare credit card deals. What we all really want to know is how credit cards compare to each other and what are the things we should all look for.

There are so many credit cards out there that choosing the right one has become almost as difficult as finding a needle in a haystack. Banks, financial institutions, airlines, and supermarkets have issued credit cards to lure in customers and there are just too many varieties to choose from.

Many people reckon that any credit card will do so long it's swipe-able. But, that is the incorrect approach. Let's take a small example: If a credit card user travels frequently and decides to settle for a rewards credit card issued by a supermarket, then his choice is wrong because he is missing out on massing flying miles and exchanging them with cash-saving offers by succumbing to the lure of some goodies and offers promised by the supermarket!

You need to understand and compare credit cards and choose one depending upon your needs. The following are some examples of how credit cards might be compared.

Steps to help You Compare Credit Cards

If you want to use your credit card for an emergency and then pay the balance in instalments, or for any other reason you feel you cannot pay up the entire monthly credit card bill, then you must choose a card that has zero annual fee, a low APR (Annual Percentage Rate) and a substantial grace period. The same condition applies if you want to transfer an outstanding balance from a high-APR card to a lower one.

If you want to avail of personal loans on your credit card then look for a credit card that offers a low APR and a low fee on personal loans/cash advances.

Compare the different kinds of fees charged by credit card companies, and you will be surprised to find there are oh-so-many fees to compare from – annual fee, cash advance fee, balance transfer fee, set up fee, over-the-credit limit fee, item return fee, etc. Choose a credit card that does not charge exorbitantly.

If you travel a lot on your own or on company time, go in for a credit card that allows you to accumulate flyer miles and exchange them for free air tickets or other goodies.

If you are a compulsive shopper and are confident of meeting your entire monthly bill on time, then go for a supermarket card that gives you whopping freebies, discounts and cash back offers.

Remember this – a credit card will have different APRs for regular purchases, balance transfers and cash advances. So, choose a card where you will have to bear the least APR depending on your spending habits.

Do not compare introductory APRs – there is fine print attached to them. Instead, compare the regular APRs.

Some cards charge a minimum finance charge irrespective of the fact your actual finance charge is lower than the minimum stipulated. If your credit card usage is not "outstanding", then do not go in for cards that have a minimum finance charge.

There is a lot of fine print attached with cash advances. If the purpose of your taking a credit card is to avail cash advances, then read and compare the following clauses – APR, access to ATMs, fees over and above the APR, cash advance limits and how payments are credited to your account (whether they will first be appropriated towards purchases and then adjusted towards the cash advance).

If you have had credit hassles in the past, then go for a secured credit card because then you can pay up a security deposit and be rest assured that your spendthrift habits are kept in check.

Once you have zeroed on a credit card, compare its features and the incentives it has on offer. Some cards offer cash back, some offer free insurance coverage, and so on.

These were some examples of how you must go around comparing credit cards and settling on one that fulfills your needs. In the end, work with a credit card that slips into your credit profile, do not default on outstanding balances and do not go overboard swiping your credit card all over the place. Good luck!

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