Credit Card Offers and Comparison Shopping
Francine L. HuffLoanBiz Columnist
With all the credit
card offers being mailed to consumers, it can be confusing to know which ones
are a good deal. While credit card interest rates are important, there are
other pieces to the equation that can't be ignored. Here's a checklist for
comparing credit cards.
Credit Card APR
When evaluating offers from different credit card companies
it's important to look at the annual percentage rate (APR). This is the amount
of credit card interest that will be charged if people carry a balance from
month to month. APRs can vary for purchases, cash advances, and balance
transfers. People who get an introductory interest rate when they first sign up
for a credit card must make sure they know what the APR will be after that
period. Some credit cards have tiered APRs, with different interest rates
applied depending upon the level of the outstanding balance. For instance,
balances over $1,000 may have a higher interest rate than balances lower than
that amount.
Billing Cycles
To avoid paying bills late it's important to understand credit
card billing cycles. Most credit card companies have grace periods of 20 to 30
days. That means that customers have that many days to pay their bill before
finance charges are calculated. Generally, the grace period applies to new
purchases, not balance transfers or cash advances. Some credit cards also don't
have a grace period for new purchases if a balance was carried over from the
preceding month, so interest begins accumulating right away.
Fees Gone Wild
Having a credit card usually involves a laundry list of
fees. Among those charges are annual fees just for having a card and late fees
for missing payment deadlines. But many cards also have fees for going over the
credit limit, bouncing a check when making a payment, and asking for a credit
limit increase. Some credit card companies even charge customers for paying
their bill by phone and other customer services. Many people are persuaded to
apply for a new credit card because of a balance transfer offer. But balance
transfers usually involve a fee, as do cash advances.
Reading the fine print of credit card offers should give people
all the information they need to comparison shop. Instead of accepting the
first offer they receive in the mail, people should take time to sift through
information about different cards and choose the one that offers the best
overall package.
Sources
Federal
Reserve
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
