Comparing Credit Card Offers

When you decide to shop for a new credit card, it’s important to compare what each card offers in terms of annual interest rates, payment schedules, reward programs, and fees. Comparing credit card offers requires just a little legwork on your part. But once you learn the terminology, understand the card’s conditions, and do the math as far as interest rates go, you’ll be able to make a smart choice in your next credit card.

Understanding Credit Card Annual Percentage Rates

The annual percentage rate (APR) on a credit card is the effective interest rate you’ll pay on your credit card balance over the course of a year. The interest rate is generally compounded daily on any balance you carry, and assessed on a monthly basis. So the amount of interest you owe each month is added to your account balance.

Obviously, you want to find the lowest APR you can qualify for based on your credit history and credit score. You’ll also want to check to see any limitations or conditions that will apply to your card’s APR such as:

• What will the actual APR adjust to after a low introductory rate expires?
• Many consumers don’t realize that the introductory APR included in a credit card offer will expire and increase to a higher rate. You’ll find complete details about the introductory APR time period in the materials you receive or view online about the card.


• What is the APR for cash advances?
• If you use your credit card for a cash advance, you’ll pay a higher APR on the amount of money you withdrew for cash. This can be an expensive option since, in most cases, your monthly payments apply first toward the balance on purchases you’ve made with your card; secondly, toward your cash advance balance. So you won’t be able to pay off the balance you used for a cash advance until your other balances are paid.


• What is the default APR rate if I make a late payment?
• Many credit card companies will not only charge you a fee if you are late making your monthly payment, but will also permanently increase your APR if you’re late. To best manage your credit card debt, it’s important to send your payments in on time.


• What is the APR for convenience checks?
• Depending on the offer that came with your credit card’s convenience checks, the APR on purchases you used the checks for will vary. In some cases it will be the same as your existing APR; in others, the APR is lowered if you use the checks within a specific time period.


• What is the APR for balance transfers?
• The balance transfer APR is often different from your standard APR rate; and most credit card companies offer special discounted rates on balance transfers from time to time.

Reviewing Credit Card Fees

Most credit card programs come with a list of fees associated with their use. Here are some typical fees that you may encounter when comparing offers:

• Annual fees. These usually post to your account on the anniversary of your enrollment date.
• Over-the-limit fees. If you exceed the amount of credit extended to you by your lender, you’ll be charged an over-the-limit fee.
• Late payment fees. If your payment is received past the due date, you’ll be assessed a late fee.

Enjoying credit card rewards

Credit card reward programs offer incentives for making purchases. Credit card companies offer a variety of rewards includes points that can be used for frequent flyer miles, retail purchases, gift cards, even cash back into your account. Here’s what to look for: