How To Compare Credit Cards
1. APR (Annual Percentage Rate)
The annual percentage rate is one of the most important criteria when comparing credit cards and yet it is so easily misunderstood. Whilst credit card companies work hard to associate a single specific Annual Percentage Rate to their individual credit card product, the reality is that there are often more than one. There may be an APR rate for purchases made on the credit card and separate higher APR rates for cash withdrawals, credit card cheques and purchases made in international countries. It is important that you check the APR rate for each of these elements, as it is usually clearly stated in the small print. Doing this will help you select the most appropriate credit card for your own personal use, as you may rely on a credit card for international purchases that you make when you travel or you may use your credit card primarily for cash withdrawals.
2. Balance Transfer Policy
This should always be carefully scrutinised when comparing credits cards as it can vary between credit card companies. Most credit cards will provide you with 0% APR for a fixed period, usually 3-6 months, but any additional spending on your credit card will be subject to interest. Also check the APR rate that the credit card will be subject to after the initial balance transfer period ends as it may be that you are better off in the long term remaining with your existing credit card provider which has a lower APR rate.
3. Late Fees
Late fees will only apply if you fail to meet the deadline for paying your credit card bill. Credit Card companies can more or less charge what they like for late fees so do some research and check the policy for each product when you are comparing credit cards. If you are a person who is frequently up to their credit limit and leaves payment until the last minute then this may be more crucial than an individual who pays off their bill in full at the end of the month. Also make sure you check to find out what happens with the late fee charges as most are added to the outstanding credit card balance and you will be charged interest on it.
4. Cash Back Schemes
If like me you like to pay your credit card off in full at the end of each month or you only use it for making purchases when you already have sufficient money in your bank, then cash back schemes can be a nice perk. It is always worth examining the credit card cash back schemes on offer when comparing credit cards as these can really add up. Some will offer between 1 and 4% cash back on purchase that you make throughout the year and this can be a huge bonus. However this element will be less appealing to you if you do not pay off your balance at the end of each month as you are automatically charged higher interest rates.
5. Fraud Protection Cover
Increasingly online fraudsters are becoming skilled at either hacking into your computer and monitoring your credit card details when you shop online or stealing credit card information directly from organisations. Fraud Protection Cover should always be a key element when comparing credit cards and given that I have been the victim of credit card fraud twice within two years I would strongly advise having it. Essentially it means that you get your money refunded if you are a victim of credit card fraud. Many credit card companies including MasterCard and VISA now provide this as a standard, but some still don’t so it is worth comparing this aspect of any credit card product to find out whether you will be covered.
6. Free Credit Reports
This is a service that is being increasingly offered by Credit Card companies to entice customers and it is always worth taking this into consideration when comparing credit cards. It means that you will be able to access monthly credit reports with leading credit referencing agencies and monitor your credit history. Your credit record will reveal who is making a credit enquiry about you and most importantly help you discover if someone is attempting to steal your identity.
7. Payment Protection Cover
If you shop frequently either on the high street or online then this is an important element when comparing credit cards. Payment Protection Cover means that if you purchase any product on your credit card, which is damaged or breaks then your credit card company will cover any loss that you incur. This option is very useful for shopaholics or those making large purchases on a regular basis. Remember that comparing credit cards can really save you money in the long term through reduced interest payments, so take some time to research.
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