Credit card comparison is the foundation of managing credit wisely. By comparing the numerous offers available, borrowers can narrow down their choices, save money and earn more rewards.
How to Compare Credit Cards
With dozens of different credit card offers from various companies, it can be a challenge to narrow down your options. However, regardless of who the lender is, look at a few specific aspects of each credit card closely before choosing.
The following list and corresponding spreadsheet provide a comprehensive guide of all the items discussed in each of the forthcoming sections. Click on the image to access the spreadsheet. As you review credit card offers, complete each section with the appropriate response that is indicated on the form.
Credit cards possess an annual percentage rate (APR) that is either fixed or variable. Although the fixed APR usually remains constant for the duration of the account, certain occurrences, such as late payments and making purchases once the credit limit has been exceeded, can cause the rate to increase. On the other hand, variable APRs can vary from month to month, depending on the market conditions.
This window of time dictates how many days you have to remit payment before interest is assessed to the outstanding balance. Longer grace periods grant cardholders more flexibility.
Certain fees, such as the annual and membership fee, are more transparent than others. Credit card companies generate a substantial amount of revenue from hidden fees. These include, but are not limited to:
- Dormancy fees
- Fees associated with exceeding the credit limit
- Payment remittance fees
- Customer service fees
- Late payment penalties
- Cash advance fees
- Foreign transaction fees
- Account closure fees
Although many credit cards come with exceptional rewards programs, there are a few factors that you must take into consideration.
First and foremost, determine if the benefits outweigh the costs. An airline rewards credit card will be useless to a person who does not travel via airways if the incentives are in the form of free flights. Therefore, it is not logical to pay the annual fee, which can sometimes be quite hefty, for a perk that you will not use.
On the other hand, if the rewards seem worthwhile, conduct additional research to inquire about any other restrictions that may apply. In some cases, redemption options are limited or there are blackout dates. You may also be subject to annual maximums, minimum spending limits and the forfeiture of awards if the account is closed.
Also, consider the feasibility of the card for your particular situation. If the credit card will promote poor spending habits because you're trying to obtain perks, it may not be worth possessing.
Inquire about standard cardholder perks offered by the issuer. Visa, Discover, American Express and MasterCard offer variations of benefits that provide insurance coverage, purchase protection and warranties, discounts, and exclusive access to events.
A lot of credit cards come with attractive introductory offers designed to lure the consumer to opt-in. Typically, they entail some sort of low initial APR, balance transfer deal, cash back bonus, or combination of the three. This is ideal if you are looking to transfer existing debt with higher APRs to the new card to pay less interest, especially if there is little to no budget transfer fees.
You may also have the opportunity to accumulate a large number of points or cash back interest-free if you make a large purchase within the specified introductory period.
Depending on the intended use, you may want to consider the brand of the card and whether or not it is accepted at retailers where you plan to shop. Visa, American Express and MasterCard are popular internationally, but many others are not.
If the credit card is a good fit, review the criteria prior to applying to ensure that your credit score will not disqualify you from approval.
Some financial institutions will grant an approval with a low credit limit if issues exist within your credit file. Beware of the fact that your credit score can be damaged if you run up the balance because of the utilization ratio.
Comparisons of Popular Cards
The following credit card comparisons show how credit cards vary. The selection of a credit card is a personal decision, based on how you will use the funds.
Low Interest Credit Cards
If you are looking for the least expensive credit cards, consider low interest credit cards. Local lenders may be a good source for a lower rate credit card but here are some additional options:
- The Capital One Platinum Prestige Credit Card offers an APR as low as 10.9%. It also offers a 0% APR during the 12-month introductory period and no annual fee.
- The Chase Slate Card offers a low interest rate starting at 11.99%, and an introductory offer of 0% APR for 15 months on purchases and balance transfers.
Cash Back Cards
Some credit cards offer cash back incentives. This means you get money back for using your card.
- The Chase Freedom Credit Card offers 5% cash back on qualifying purchases, no annual fee and a $100 bonus cash back offer when you spend $500 within the first three months. You can earn up to $1500 in cash back each quarter.
- The Bank Americard Cash Rewards Credit Card offers 2% cash back on purchases at grocery stores and 3% at gas stations. Earn 1% cash back on all other purchases. This card does not have an annual fee, but has an APR starting at 12.99%.
There are many other options to look for in credit cards.
- For the college student, consider the Citi Dividend Platinum Select Visa Card with no annual fee and a low APR of 13.99% to help students build credit. Another student card to consider is the Journey Student Rewards Credit Card with its cash back benefits, no annual fee and a 19.8% APR.
- For balance transfer offers, consider the Citi Diamond Preferred Card, with a lengthy 18-month 0% APR introductory offer on balance transfers and standard APR starting at 11.99%. The Discover it Credit Card is another option, with a 14-month 0% APR on purchases and balance transfers, and cash rewards of up to 5%.
Select a Credit Card That's Right for You
There are a large number of credit cards on the market to choose from, but many of the offers vary. When narrowing down your selection, be sure to analyze the factors listed above. Make sure you know what you are getting yourself into when applying for a credit card so there are no surprises down the road.