Credit Card Comparison

Credit card comparison, especially for the first time credit user, can be a daunting task. Like any other financial decision, it requires research and planning to make the best move. In this article, we’ll narrow the focus on some of the most important points to review during a credit card comparison.

Identify Your Needs

Some people put every single purchase on a credit card: gas, groceries, health club fees, the newspaper, stamps and their morning coffee. Others use credit for major purchases and travel, and still others might only keep a low limit credit card available for emergencies.

There is a credit card for each type of spender. The key is to analyze your spending habits and zero in on why you need a certain type of credit card. Or maybe, after already experiencing different levels of credit, you’re now considering options for Credit Card Balance Transfers. You will never run out of credit cards to compare, so here are a few points to match to your needs.

Primary Considerations

Billing Cycle. Billing cycles fluctuate by as much as seven business days. While most credit cards offer a 28-30 day billing cycle, many others will sneak up with a 22-25 day billing cycle. Read the fine print to avoid penalties and manage your budget accordingly.

Interest Rate. If you plan on paying off the full balance each month, this shouldn’t matter to you. Nevertheless, life happens, and there may be a month when you might have to carry over a balance. This is when the Interest Rate really has an impact. Educate yourself on how the credit card’s interest rate can make a big difference to your budget and financial goals.

Annual fee. It’s true: many lenders require an annual fee to borrow credit, and the fees range from $50 to $200 a year, depending on the associated services. Annual fees might also be waived for a period of time to introduce you to the card, only to be activated after a year. During your credit card comparison, take time to review the services before signing up for a card with an annual fee.

Grace period. There are cards that have as little as a one day grace period past the due date. If you’re used to paying bills electronically, a grace period may not be important. But if you’re mailing your check and have a certain payment structure, investigating the grace period is a good idea.

Acceptance. Because of merchant/lender agreements, not all credit cards are accepted everywhere. If you’re an American planning on doing a lot of international travel for example, you’ll find that Visa and Mastercard are widely accepted abroad. Some domestic merchants don’t take American Express and Discover Card. A simple phone call to customer service can usually clarify acceptance.

Secondary Considerations

Charitable associations. Many credit cards donate a percentage of your total purchases to an affiliated charity, organization or university. If this is something important to you, it might be a factor in your credit card comparison.

Incentives. Credit cards offer a slew of promotional offers to get you signed up, but many also feature cash back or reward programs to encourage your continued patronage. There are numerous credit card incentive options, including a cash back percentage on purchases (generally one to five percent) and reward programs such as frequent flyer miles, hotel and travel packages, car rebates, entertainment rewards, gas rebates, mortgage purchases and even a child’s college tuition.

• A caveat: There is always a give and take with incentive-based credit lending, such as a higher annual fee, less acceptance or expiration on incentive accumulation. Review the primary considerations first, then evaluate the overall worth of an incentive-based credit card.

Protection and insurance. Like incentives, these options vary widely from card to card. Many basic cards cover items stolen within a certain time period after purchase. Other cards offer more extensive services, like car rental liability coverage, debt recovery and flight insurance. Note that while some of these services are standard to a card, many are only available with an additional fee.

Credit Card Comparison Isn’t Always Final

It usually takes two to six months to determine if a credit card is right for your spending habits and financial objectives. It is also a good habit to evaluate your use of credit periodically.

For example, if you don’t like a card’s billing cycle, call customer service. Many companies will allow a customer in good standing a one-time adjustment to the due date to coincide with your payment plan. If not, you may want a different card with more flexibility. In time, you may discover that an incentive-based card provides more purchasing options than the basic low-fee card you initially secured.

Taking time for credit card comparison is a strong financial management tool.