Compare Credit Cards - How to find the best card

It is quite interesting how the average consumer tenaciously shops around when looking for a new washing machine or a new car. Yet, when it comes to credit card offers, we rarely take the time to compare credit cards. We tend to accept credit card offers at face value without delving as deeply as we should. Given the interest rate increases of late, perhaps shopping around for alternative credit card offers could serve to ease the debt burden a little. The fact of the matter is that the issuers are heavily competing for market share and that consumers have an opportunity to clinch better credit card offers. If you decide to capitalise on this competition, invest an hour or two to compare credit cards before filing your applications.

There are effectively seven things to consider when you research and compare credit cards:

Personal Circumstances
Before you compare credit cards, make sure you understand why you need one. Is it rewards you are after? Do you want to consolidate your credit card debt? Or do you simply want a low interest credit card that offers you the best credit card rate? This will influence the type of credit card offers you will be focussing on. Also establish what your credit rating is as it will have a bearing on the type of credit card offers you can take advantage of and the interest rates you will pay. Also, when you compare credit cards, decide upfront whether you intend carrying a balance or whether you will be settling your full balance before the grace period expires.

Balance Transfers
If you already have a credit card, remember to look at balance transfer rates when you compare credit cards. To lure credit card holders like you to them, issuers are making 0% balance transfer credit card offers when you move your current card’s balance to one of their cards. In practice, this means that you will enjoy an interest free loan for a certain period of time. This interest honeymoon period is often 6 months, but could be either longer or shorter depending on the issuer. After the 0% balance transfer credit card offers expire, interest will be charged. When you compare credit cards from a balance transfer perspective, bear in mind there are some issuers who still charge interest (0.99% - 7.99%) on the amount transferred.

Interest Rates
There is a very material difference between the interest rates charged by the different issuers: 7.72% to 19.4%. When you compare credit cards to identify the best credit card rate, take all the different types of interest rates into consideration as well. There will be a difference between rate applied to purchases and the rate applied to cash advances. Check out the default interest rates when you compare credit cards. A low interest credit card can quickly become a high interest credit card if you slip up on a payment.

Grace Periods
The reason why you should compare credit cards from a grace period perspective is that it determines how soon interest will be charged on a purchase made. Anything between 0 and 55 days’ grace is offered. ‘0 days’, even on a low interest credit card, could result in your paying 30 days’ interest on the pizza you bought, making it considerably more expensive than expected. Up to 55 days interest free is generally the longest interest free period on purchases between each billing period

Credit Card Fees
There are not many issuers whose credit card offers include $0 annual fees. The range you will find when you compare credit cards is $0 to $250 per annum. It is a fee you have to pay every year, and the truth is that you get very little, if anything, in return for this fee. Make a point of scrutinizing this aspect of all credit card offers carefully when you compare credit cards.

Payments
Whilst this is generally something you can negotiate with the issuer, remember to read the fine print of all credit card offers carefully if you compare credit cards to establish the monthly minimum payment due dates. If the payments fall due in the middle of the month, and you only get paid at the end, it could cause interest charges.

Features and Benefits
It is good to compare credit cards from this point of view to identify whether fraud, card theft and identity theft protection, amongst others, are covered. If you recall, there was an issue a couple of years ago when several Australian credit card holders were affected by mass cyber fraud. We often tend to overlook this critical aspect when we compare credit cards.

Once you gathered these seven pieces of information, you will be able to compare credit cards quickly and effectively. The best credit card offers will always be those that suit your credit behaviour and your personal circumstances best.

For additional information on credit cards or related topics please visit our library of credit card articles.