There's a Right Way and a Wrong Way to Compare Credit Cards

There's a Right Way and a Wrong Way to Compare Credit Cards
If you're going to compare credit cards, you'd better do it
right. The process can be overwhelming and a mistake can
cost you hundreds (if not thousands) of dollars. Want to
know how to do an apples to apples comparison, leaving no
margin for error? Here are the things you need to look for.

Intro APR vs. Fixed APR

First of all, don't take an APR at face value. Sure, you
can apply for that 4.99% credit card offer, throwing the
7.99% offer into the shredder, but what if that 4.99% rate
is just a teaser? What if it jumps up to 14.99% after a few
months? That 7.99% fixed rate sure would have been better.

Before you apply for any credit card, make sure you know
the details of the APR. Is it fixed? Is it an intro or
"teaser" rate? If it is, what's it going to jump to when
the introductory period is over (and how long with that be)?

A Nickel Here, A Dollar There

Let's compare credit cards A and B in this scenario. Card A
has an APR of 7.25% and it's a fixed rate. Card B is 9.9%
and it's also fixed. Which card do you choose? If you
picked card A, slap yourself on the hand.

Sure, card A might have a lower interest rate but what if
the annual fee is $59 and there's a minimum monthly finance
charge of $5? On the other hand, card B has no annual fee
and no minimum monthly charge. Card B would be the better
choice.

A low APR is great, but not if it means high fees. When
considering the cost of a credit card you need to consider
ALL of the costs, not just the APR. Is there an annual fee?
If so, how much is it? Are there minimum monthly finance
charges?

What About Grace?

Always compare the grace periods when you try to compare
credit cards. A credit card that offers a grace period of
25 days is always better than one with no grace period at
all. Credit cards that don't offer grace periods begin
charging interest from the day of your purchase. That money
can add up over the years and it's money out the window.

Remember, on the surface two credit cards can seem similar
or one can seem way better than the other. It takes digging
a little deeper to really see which credit card is better
for you. The next time you compare credit cards make sure
you take all the above factors into consideration before
making your choice.

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