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By Julia Kukiewicz Staff Writer
Monday, 7 July 2008
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7 Things to Remember when you Compare Credit Cards
Those 7 credit card comparison tips in brief…
- Not all Credit Cards are the same. Decide what you need your credit card for first and then find the best credit card for the job.
- Know Your APR…
- …And your Balance Transfer Fees
- Remember your age and your payslip…
- …And your Credit Status
- Watch out for Introductory Rates
- Remember that no Card is Perfect
Compare credit cards now…
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WE all know we should compare credit cards before we apply for them but by not comparing effectively we often miss out on the deals most suited to us or, worse, get a card that lands us in financial trouble.
Luckily, there are 7 golden rules to follow when you compare credit cards and we just might let you in on them...
1) Not all Credit Cards are the same
This seems like an obvious point to start with: after all, there’s no point in setting out to compare credit cards – or any things - that are the same.
But when you compare credit cards it’s important to remember the many ways that credit cards can differ.
It’s easy to just compare the length of the 0% credit card deal or just get the card with the lowest APR rate, but that presents a false picture – those credit cards might not necessarily be the best ones for you and you could miss out on great credit card balance transfer offers or credit card freebie deals.
There are over 1300 credit card brands in the UK. Comparing credit cards solely on the features that will be most useful to you will help you compare as many relevant credit cards as possible and get the best credit card deal.
2) Know Your APR…
Credit card companies are bound by law to actively display the annual percentage rate (APR) that you will pay on your credit card.
That figure includes both the interest rate and any compulsory fees and lets you compare like with like when you look at credit cards.
However, APR applies only to purchases and not to cash withdrawals using the credit card.
The rate you will pay for withdrawals is often not shown on basic credit card comparison tables so if you think you will use your credit card to make them make sure you compare both rates.
3)…And your Balance Transfer Fees
It's great when you can get a low percentage APR which allows you pay off old balances with a low rate.
But watch out.
Credit card balance transfer fees can often significantly reduce the money that you will save with 0% and low percentage balance transfer cards.
Always keep in mind the fees when you compare balance transfer credit cards.
4)Remember your age and your payslip…
These shouldn’t be too hard to forget! But you need to keep them both in mind when you compare credit cards.
This is because some credit cards, especially platinum and gold cards, require you to be over 21 and earning a certain amount.
Don’t compare credit cards that you’re not eligible for – it’s a waste of time.
5) …And your Credit Status
The figure shown when you compare credit cards is just an estimate. Your actual credit status will determine the APR you will have to pay.
This will be most likely to affect you if you have a poor credit rating so bare it in mind when you compare credit cards.
Getting the right card can improve your credit rating but getting into debt will only lower it.
6) Watch out for Introductory Rates
You’ll often see introductory purchase rates when you compare credit cards and these can be great as long as they aren’t shorter than the introductory balance transfer period.
The two things often go together in order to encourage you to spend on the card even though you won’t be able to pay off those purchases until the balance transfer is paid.
In the meantime those purchases will only be sitting around accruing interest and waiting to cost you money.
So when you compare balance transfer credit cards, keep an eye open for introductory rates on purchases that are shorter than the introductory rate on balance transfers.
7) Remember that no Card is Perfect
If rom-coms have taught us anything it’s that you can rarely have it all.
And what’s true for Hugh Grant is also true of credit cards. Credit card comparison that claims to find the perfect card for every situation is a credit card company’s dream because it means you’re bound to make them a ton of money.
If you spend on a card that you’re using to pay off some debts, for example, you can end up undoing all the good saving work the card was meant to do in the first place.
Always compare credit cards so that they’ll work for you, not for the bank.
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