With so many credit cards on offer, it is not easy to choose the right one. You have to consider many factors while comparing credit cards. Here are some of the most important things that you should look at while you compare credit card offers:
Annual fees
An annual fee is a cost that credit card companies charge their customers to cover their operational costs and make a profit. The annual fee can vary from card to card and depends on the features that are offered by the card.
An annual fee is charged once per year, allowing you to plan your expenses accordingly since this will be an expense you will have each year.
Some cards require an annual fee monthly, which may be easier for some people who want to pay as they go without making an upfront payment in full at once every year.
Interest rates
Interest rates are the cost of borrowing money. This can be a good thing or a bad thing, depending on your perspective, but it’s essential to understand how interest works to make an informed decision about which credit card is right for you:
- Credit cards with higher limits typically have lower interest rates than those with lower limits.
- Many rewards credit cards carry higher APRs (annual percentage rate) than basic cash back cards and travel credit cards do since they offer more attractive rewards programs to help offset the higher costs associated with them.
Grace periods
The grace period is the time between the end of your billing cycle and when you are charged interest. Most credit cards give a 25-30 day grace period, but some offer shorter (15 days) or longer (45 days) periods.
The main thing to remember about a grace period is that it’s only relevant if you pay off your balance in full before it’s due. If you don’t, interest begins accruing on any unpaid balance as soon as your statement closes. And it continues until the balance is paid off, even if it’s done within 30 days.
Fees for late payments, cash advances and balance transfers
The fees for late-payments and cash advances will depend on your card. For example, you might be charged $25 every time your payment is late with one credit card. However, with another card, it could be as high as $35 or more depending on how often you pay late (for example: if you pay late three times within a year).
The fee for balance transfers is also different across cards; some may charge $10 while others don’t charge anything at all.
Rewards and benefits
- Rewards and benefits are a great way to earn more value from your card.
- Rewards usually come in the form of cashback, points or miles and can be redeemed for various things such as gift cards, travel expenses like airfare and hotel stays, or other merchandise.
- Benefits include things like roadside assistance services and fraud protection.
- As per Lantern by SoFi experts, “Also known as a secured credit card, this is a credit card that you have to provide a (refundable) security deposit for” could be taken into consideration too!
The takeaway from this article is to be aware of the different factors when comparing credit cards. While it may seem like an easy task, there are a lot of hidden costs and fees that can add up if you’re not careful.
The takeaway from this article is to be aware of the different factors when comparing credit cards. While it may seem like an easy task, there are a lot of hidden costs and fees that can add up if you’re not careful.