Why should you compare credit card offers?
When you’re getting a new credit card, it’s important to verify all the offers available in the market. After all, it’s your money, you should ensure that you are getting the best available deal along with the card.
But first...do you know how to evaluate credit card offers without missing important aspects? No??
Here are the steps you should follow every time while picking up a credit card.
- Consider your usage
You need a credit card, that’s cool! But what for?
Do you want to use it for emergencies? Or do you like to make regular purchases? What is your monthly spending towards shopping? Will you use the card for travel too?
There are several questions like these that you need to answer yourself. Once you get the answers, you’ll easily find the actual type of a credit card you need the most.
Match your requirement with the offers and evaluate correctly.
But remember! Try to avoid credit card offers from the companies you aren’t familiar with. Scammers may also be looking for you, as you are looking for a good deal.
Apart from that, unknown sources aren’t always giving you the cheapest deals considering your choices.
2. Consider the type of card you require
Credit cards can be categorized into 4 lineups. It is up to you which one you need the most. Here are the types of credit cards and their specifications:
- Balance transfer cards – Ideal for consumers who already have credit card debts. Interest rate of this card is relatively low; so consumers can transfer high-interest credit balances into this one and save a lot. Balance transfer cards charge a fee to transfer a balance, but normally comes with a 0% introductory offer.
- Reward cards – This card is specially designed for consumers who make full credit card payments every month. The reward cards have special discounts, cash back benefits, points or miles rewards for the consumers. New cards also have some signup bonus rewards. Attractive bonuses are also available for the cardholder when he/she reach a certain spending limit.
- 0% APR cards – It’s best for those credit card users who tend to carry balances on their cards and pay less or minimum amount. These credit cards with 0% APR offers 0% interest on every purchase they make and also 0% interest on balance transfer for the next 12 to 18 months.
- Secured credit cards – This card is best for consumers with bad or poor credit score. These cards are quite similar with prepaid cards as they require a cash deposit, sometimes equal to its credit limit. But unlike the prepaid cards, the consumer needs to pay off the bill. The credit bureaus will use data from your activity on that card to determine your credit score.
Once you identify the card types, you can compare credit card offers with your requirement and pick the right cards for you.
- Consider introductory offers and reward programs
If you ask yourself, “Why do you compare credit card offers? What for?” The answers would be simple...offers, rewards, bonuses, cashback, free miles, and many more would be on the list.
What should you check about reward programs?
| In some cards, the rewards will be available to you after you reach a big balance amount. Some reward cards provide special bonuses on typical purchases like groceries or gas. Few others provide good discounts for travel with good mile rewards. You can even redeem your credit card rewards in form of cash, travel miles, gift coupons, merchandise and many more things. |
Don’t forget to compare the interest rates of credit cards with the benefits you are getting. Selecting a card with high interest but with zero bonus/rewards will be a loss of your time and money. Drop the idea of getting a card that has greater interest or charges than offered bonuses.
Credit card companies will lure you with great introductory offers. Don’t fall into the trap. Check out for the charges they’ll levy at the end of the introductory period.
If the charges suit you and you are getting more benefits later, just carry on with it. But if the charges are too high to adapt, make sure you have the permission to cancel the card without any penalty.
Try to do it before the introductory period ends.
- Compare APRs of each card you are interested – One of the best ways to compare credit card offers is comparing APR (Annual Percentage Rate). Credit card companies may apply different APR’s on different cards.
APR rates do not apply to every purchase you make.
So, you need to understand all the details of the card to make sure that you are comparing offers with credit cards with similar features.
- Check out the method used by the credit card companies for calculating balances
Your credit card company will charge you based on the balance of your credit account.
You should know that different companies use 4 different methods to calculate your balances.
- Average daily balance method – The credit card balance is calculated on daily basis. The interest is charged on the average of those balances.
- Previous balance method – The interest is charged based on the previous month's balance.
- Adjusted balance method – If you make any payment during the current billing period, the credit card company may subtract that amount from the previous billing period balance. This may happen just before the previous bill is generated and is sent to you. It is the best among the 4 methods, beneficial for consumers.
- Two-cycle average daily balance or two-cycle billing – The average of your current and previous months’ balances will be used to calculate the charges.
6. Consider the fees applicable and their value
You know what!! All credit cards come with multiple fees. But you must know them well, pay them if necessary or just avoid them if possible. Let’s have a look at the most common credit card fees:
- Annual fees – It is charged for the facility you are using in form of the credit card. An annual fee is charged once in a year. If you apply for a credit card with annual fees, you might get great rewards and higher sign-up bonuses along with it.
- Late payment fees – Fees applicable to late payments may vary depending on the credit card company. Consumers can avoid this fees by making ontime payments every month. To ease up the process, you can set up automatic payment system by coordinating with the bank.
- Cash advance fees – It is a fee charged by a credit card company on the cash advance you’ve taken out from your credit card account. Few credit cards have options to withdraw cash via ATM or bank. Consumers need to pay this fee along with the borrowed money and it has no grace period for making payment.
- Foreign transaction fees – If you make any foreign transaction through your credit card, then you have to pay this fee. It is based on the amount you’ve spent overseas. Credit card company normally charge 3% to 4% as a foreign transaction fee.
As a consumer, you must try to avoid all the fees at all costs. But you may ask yourself how to avoid credit card fees? You can do it by practising good spending habits and saving cash for emergencies. However, while comparing credit card offers, you can choose a credit card with less or zero fees.
- Check how many retailers accept your card
Every single credit card is associated with few major payment networks like Visa, MasterCard, Discover, and American Express.
All of these cards are may be accepted by your local retailers, but the situation might not be the same if you travel abroad.
Visa and Mastercard are accepted worldwide but the other network cards might not.
So, you should check the acceptance of your card with your local retailer network before opting it.
It is wise to get a card that has worldwide acceptance.
- Other additional things to consider
You can easily get those credit cards which come within your credit score range. So, if your credit score is law, go for a card with a low credit limit.
If your credit score is good, you have the option to choose from multiple high credit limit cards.
Your income may be another factor to consider while picking up a credit card. Choose low limit cards if you have low income, whereas with a high income you can get a higher credit limit card, even if it has a good annual fee.
So, these are the steps you need to follow while evaluating credit card offers. Additionally, check out the credit cards’ terms and conditions before signing up the documents. Credit card companies are bound to reveal all the hidden charges in the documents, so check the details carefully.