Thursday, 14 January 2010
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Practical Tips When Comparing Credit Cards
We often hear the advice to always compare credit cards before choosing the right one. But how do you compare credit cards effectively? What particular features of the credit card should you pay attention to? How do you know if a credit card is really the right one for you? In this article, we’ll be discussing the positive steps in choosing and comparing credit cards the right way.
Choose the type of credit card that meets your needs. Different credit cards are created for different purposes. For instance, reward credit cards are categorized according to the rewards they offer. Gas reward cards are great for people who often drive, frequent flyer credit cards are best for frequent travelers and cash back cards are recommended for people who shop a lot.
If you have bad credit, you may consider getting a secured credit card as secured cards can be used as tool for building or improving one’s credit history. On the other hand, if you need to consolidate your credit card debts, then a low interest balance transfer credit card can help you. In addition, business credit cards are also available for entrepreneurs or small business owners. As you can see, you can find a credit card based on your primary need and priority.
Compare the APR. The APR or the annual percentage rate is the interest that will be charged to your unpaid monthly balances. Each time you carry over a balance, you automatically incur the additional interest rate. Obviously, you’ll want to find a credit card that offers a reasonable interest rate of APR. Watch out for credit cards with incredibly low interest but is accompanied with expensive fees and penalty charges.
Compare all the credit card fees. As we’ve mentioned, the APR or the interest rate shouldn’t be your only concern. Don’t forget to compare the rest of the fees and charges that comes with your card. For instance, take a look at the annual fee and the late fees as well. Usually, reward credit cards are very strict when it comes to implementing penalties. A single miss or delay in your payment can cost you to lose your rewards and get penalized with high interest and expensive late fees. That is why it is so important to be aware about all the fees associated with a credit card.
Weigh the special features offered by the card. Not all credit cards offer the same features. One of the most important provisions you should look for in a credit card is the Liability Protection. Some cards offer a zero liability protection against unauthorized charges so you can be sure that you won’t have any trouble in case of a fraud. If you’re getting a secured credit card, make sure that it reports to the three major credit reporting agencies to ensure that your credit will improve at the soonest possible time. Other special features are online account access, travel insurance, discounts, etc. Be sure that these add- ons matches your lifestyle and will be useful for you.
Understand the terms and conditions. Do not just read the advertisements as they only present the best features of the card. Instead, read the fine print to get to know the credit card better. Finally, after comparing the rates, fees and the rewards, take the time to read the credit card agreement in full. If there are terms or calculations that you don’t understand, don’t hesitate to call the credit card company for a clear explanation. Remember, never sign up and submit your application without reading and understanding the contract.
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