Tuesday, December 12

Things to Look For When Comparing Credit Cards

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For the confidently savvy consumer, knowing what things to look for when comparing credit cards can seem like a confusing endeavor. After all, aren’t all credit cards basically the same? The basics are understood by many: Purchasing items on credit means buying a good or service with money you do not directly use at the moment, then pay back to the third-party credit card company later. The faithfulness and accuracy to with this credit card debt is paid back is then used to form a credit history, which in turn establishes a credit score, with then can be leveraged as a good-trust agent in negotiating larger purchases that demand payments over time.

While the subject of credit cards is often mired in the issues of debt management, economical ethics, and the habits of the “shopaholic,” knowing the things to look for when comparing credit cards remains a useful piece of knowledge when searching for a new card, or when you are looking to land that plastic for the first time.

Renown

If you are getting a credit card, then you should hope to be able to use it, which is why the notoriety of a brand is so important in knowing all the thingto look for when comparing credit cards. Have you ever heard of that particular credit company? Does the name sound very familiar, thanks to its popularity with big businesses? Names like Mastercard, Visa, Discover, and American Express are sure to serve well in a wide variety of situations, but even smaller, niche cards can be great for certain consumers. Do your research: Figure out what you will be using your new credit card for most of the time, and ensure the brand is compatible for that endeavor.

Rates

Whenever you fail to pay your full credit balance before the due date of a bill, you will be charged interest on the debt. Also, credit card companies pull a shady move on consumers by giving them a “minimum required” amount to pay on their bills, but paying the minimum ensure that the debt remains, and grows exponentially, as it accrues more and more interest every month. This is why checking the rates carefully (along with when they increase and/or how often they may change) can be so important as part of what to look for when comparing credit cards: It can be an enormous long-term monetary difference.

Rewards

Alternately, what if you are a wise, responsible person and plan on being a mature consumer who always pays your bill on time and in the full amount, thus avoiding any interest charges? In this case, what is the incentive to bother using a credit card, since you may as well use a debit card or cash methods? This is where rewards come in. Credit card companies will often offer a “cash back” program for responsible bill-payers that rewards them for choosing to use the card at all. Usually, this is a percentage-based program, and sometimes dependent on the types of purchases. For example, a card may offer 3% back on gas and groceries, then 1% on all other purchases. This way, using a credit card actually put you slightly ahead financially. Usually there is a minimal amount to accrue, like $100, at which point you receive a rebate or check. Research carefully as you consider what to look for when comparing credit cards, though: Sometimes certain types of purchases are excluded from the rewards program, the redeeming minimal value is exorbitant, or other tricks that credit card companies use.

While it is true that many credit cards are essentially the same and many consumers would never notice a truly significant difference, knowing what things to look for when comparing credit cards means knowing the little details that lead to a slightly more enhanced personal financial situation.

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