Comparing Credit Cards: Where To BeginOctober 4, 2009 - 1:45 am
There are a lot of things to consider when comparing credit cards. This is because there are cards out there for every type of consumer, which include a lot of high-interest, high-limit cards that can quickly bury you in debt. It’s tough to know where to begin in some cases, but by approaching the credit card business rationally, you can find a card that will help you build credit and buy responsibly.
The most obvious method of comparing credit cards is to consider the interest rate of the cards. Looking around for a low APR can be a great idea, and there are tons of aggregate websites that show the different APRs of a variety of cards. When doing this be sure to read the fine print to make sure that your APR won’t rise spectacularly after some period of time. For instance, it’s common to have 1 percent or 0 percent APR cards that go up to 20 percent or more after a year. Any card is likely to drastically increase its interest rate if you miss even a single payment. Look for balance transfer rates, too, if you have other card balances that you might want to transfer over to your new low interest rate.
If you plan on paying off a credit card every month, you should consider the rewards of different cards before making a selection. Many cards offer decent cash back rewards, with more “points” paid at certain establishments or types of stores (for instance, grocery stores or gas stations). For many consumers, it can be a great idea to pay all of their bills with a cash back card and then pay off the card at the end of the month. This accumulates the cash back without paying the hefty interest rates that these cards sometimes carry. If you don’t trust your spending habits, though, these cards can mean trouble. Get a card with a low limit if you’re not sure of how you’ll handle the credit, and if you do well after several months, you can always contact the bank for a credit increase.
With all credit cards, it’s important to read the small print and practice responsible buying habits. Pay off as much of the card as possible every month, and never miss a payment to avoid big interest increases. If you can be responsible with a credit card, it can be a great way to save a bit of money and build up your credit, but be sure to do your research before filling out any applications. A bit of research can make a big difference in the long run.