With the media filled with stories about credit card companies’ new hidden costs and interest rate hikes since the credit crunch started in ’07, the consumer needs now more than ever before to do due diligence before applying for a credit card. Picking a good card is about more than merely finding the card with the lowest purchase APR or yearly fee; depending on your situation, the card with the lowest purchase APR or annual fee might possibly not be the best choice at all. Here are the 4 crucial factors that have to be considered when doing a thorough credit card comparison search:
One: fees. There’s more to card fees than just the annual fee. Some credit card companies charge a three percent fee per balance transfer. Many cards also impose foreign-transaction charges, cash-advance costs, bank wire payment fees, and convenience-check charges. Failing to recognize these charges often leads to upsetting surprises on your monthly bills.
Two: the introductory rate. Card companies understand the character of their market. That’s the reason why they keep changing credit card offers to one-up their rivals. Many people get cards to milk special introductory rates. It’s vital to know how long these starting rates last and what the permanent rates will be after the end of the introductory “honeymoon” period comes to an end.
Three: the annual percentage rate. APR is one the commonest factors used by consumers to choose among the loads of cards available. However, it is important to recall that APR is frequently not a single number. Consumers should pay attention to not only the purchase APR, but also to the cash-advance and balance transfer APR. One can suppose that a card advertised as having a 0 percent APR for purchases offers the same percent rate for cash advances and balance transfers, but that’s usually not correct.
Four: the grace period. Many folks expect that a thirty-day grace period is automatically included with all cards. But there are some cards that come with sixty-day grace periods and others that come with grace periods of only 20 days. Ignorance of the grace period might result in delinquent payments and a weakened credit report.
Signing up for a credit card gets you into a relationship with your card issuer. When you really compare credit cards and understand the particulars of that relationship before applying, you can prevent significant surprises on your bills and eliminate unnecessary tensions from your fiscal life.
Kirby Sutton is a freelancer, online journal editor, and ebook author with a background in finance. He writes articles on consumer credit issues.