How to Compare Credit Cards
Before you open those credit cards from a direct mail offer or website ad, compare what else is out there. Taking the step to compare credit card offers can help you get a card that’s right for your needs, has a competitive interest rate, and which offers the kinds of rewards you want — without features you’ll never use.
Know Your Current Credit Card Pros and Cons
There’s no one right card for everyone. Before you start credit card shopping, think about how you use the credit cards you already have. Are you aiming for a big reward, like free airline miles or cash back? Do you pay off your balance in full at the end of every month, or do you carry a balance as often as not?
You have to know this stuff in order to really compare credit card offers, so dig into previous months’ statements to get a feel for how you use your cards. While you’re reviewing statements, look for the APR (annual percentage rate) you’re paying in interest with existing accounts, and how much credit you have.
What to Look for With Credit Card Shopping
Once you understand your current cards, compare offers by:
Credit Limit – If you’re thinking of renovating your home and putting big-ticket items (like appliances or lighting) on a credit card, you’ll want a high credit limit. Home renovations add up quickly.
Fees – Some cards have an annual fee and some are free. Often, the rewards cards with the best deals have fees. It can be worth it to pay, say, $69 per year to earn airline miles if you anticipate earning enough rewards miles to fly free. If you carry a balance on your card, avoid fee cards until you’re able to pay off the card balance at the end of every month.
Rewards – If you have a responsible credit history (i.e. you don’t carry over balances except in cases of emergency), then a rewards card can be a good way to rack up attractive rewards. There are all kinds of rewards cards, from store credit cards to airline cards and all-purpose rewards cards.
APR – The higher the APR on your card, the more you will pay in interest if you carry a balance. It might not seem like a 15 percent APR is much different from a 17 percent APR, but that 2 percent difference adds up. By lowering your APR, you’ll pay off debts faster, and maybe soon you’ll be able to pay off what you charge every month. Some cards have a penalty APR, which is triggered anytime you have a late payment. This should be stated clearly in print. If you know you sometimes pay late, avoid these cards. Additionally, some cards have a variable APR, which can change at any time.
Balance transfers and 0% introductory APR – Some cards charge no interest for an extended time period, such as a year after opening. If you have a balance on a card with a high APR and you initiate a balance transfer to the 0% APR card, you can pay off your debt without earning any interest. If you have debt and you want to develop smarter financial habits, this can really help.
The time you spend shopping around for a new credit card more than pays you back with better benefits or a lower interest rate. After you’ve received your new card, don’t automatically close out your other credit card accounts. Old accounts can positively impact your credit score, so it’s worth keeping those old cards open even if you no longer use them.
Use these free tools to compare multiple credit cards so that you can make the right choice for you!
Liya is a financial educator with a background in SEO focused content writing. She has been doing copy writing and blog creation for finance companies for over 5 years.