Compare Credit Cards

Everyone is sending you all these amazing credit card offers. But you have no idea which one is for you, and then you hear one person tell you this credit card from “Bank of America” beats everyone hands down, and then you have another person tell you that “Citibank” is the best. Well both people might have valid reasons for them telling you why they rate them the way they do. The one thing you have to remember is everyone has different needs, so I am going to give you a check list you need to go through. Then you can decide which credit card you need and want to have.

How will you use your credit card

• Will you be paying off your credit card balance every month? If so then a rewards program with no annual fees is what you should be looking for.
• If you carry over a balance from month to month. Then you will need to look at a credit card that offers a low APR or Interest rate.
• Will you be using your card to get cash advances? If so you need to look for a credit card that carries a low APR and low fees on cash advances. Most credit cards charge higher APR on cash advances, some even start charging interest immediately on cash advances

APR Differences:
Annual Percentage Rate(APR) is the way the credit card companies way of stating the interest rate you will pay carry if you carry a balance, take out cash or transfer a balance from one credit card to another. The APR is basically the interest rate per year.

• One APR for purchases, for balance transfers and for cash advances. The APR for cash advances is usually a lot higher than for normal purchases. (10% on Purchases 19.5% on Cash Advance and 17% for balance transfer.)
• Tiered APR; for different balances different APR are charged (16% if you owe up to $1750 and 18% above $1750)
• Penalty APR: If you make late payments twice in a row. Your APR agreement you had will be cancelled, a higher one will be charged.
• Introductory APR: After a certain time period that you agreed upon, that introductory APR will end and a new one usually a higher one will be charged.
• Delayed APR: 0 APR until next October. You will need to look at the APR after October.

Fixed and Variable APR:

• Fixed APR will hardly change over a period of time, but if they do change the credit card company will have to notify you before they can increase the fixed APR.
• A variable APR can change from time to time; this rate is tied to the prime rate/treasury bill rate. If that changes either up or down, so will your APR rate.
• All these details are in your terms and conditions agreement when applying for a credit card.

Grace Period

• This is the number of days you have to pay your outstanding debt, free of any interest charges and that you have paid your previous balance in full. The number of days varies from Credit Card Company. Cash advances and balances transfers are not given grace period as theses are charged interest immediately.
• If you have a balance from the previous month you may not have a grace period for your new purchases. You may be charged interest as soon as you make a new purchase and you will be charged interest on the earlier balance. You will need to look at your terms and agreements on “How is the finance charge calculated?”

How is the Finance charge calculated?

· A Finance charge is amount you pay to use credit, it will vary since it is calculated on your outstanding balance and the APR

• Credit Card Companies have several ways of calculating these charges
• Over one billing cycle or two
• Using the adjusted balance, the average daily balance or the previous balance
• Including or excluding new purchases in the balance

· Depending on the balance you carry forward and when you purchase and the payments you make you will have the best option if you take the one cycle billing and either

• the average daily balance method excluding new purchases,
• the adjusted balance method or
• the previous balance method.

Minimum finance charge:
Some credit cards will charge a monthly fee this will be listed in your terms and conditions

What are the Fees?

• Annual fees
• Cash advance fee
• Balance transfer fee
• Late payment fee
• Over the limit fee
• Credit limit increase fee
• Setup fee
• Return item fee
• Other fees not said here.

All these fees are in the terms and conditions of the credit card you are applying for. They will tell you exactly how much you will be paying for each of these fees mentioned above.

What are the Cash Advance features?

Some credit card companies will allow you to borrow cash advances, but will treat it differently to a regular purchase. These are the things you need to know about.

• How to get cash advance: Either by ATM or ask for a check
• APR is usually higher than a regular purchase
• Fees are added on top of the higher APR
• Limiting Cash advance to a dollar amount, per week and percentage of available credit limit.
• Your payments are either credited to purchases then cash advances. Check your terms and conditions on how you will be treated

What kind of card is it?

• Secured credit card: Will require a security deposit, credit card company will then borrow you sometimes 50% of the total security deposit you made. This type of credit card is usually offered to people who have bad credit
• Regular credit card: This credit card is un-secured credit which is higher than secured credit limits no need for a security deposit.
• Premium credit cards: Usually higher credit limits than regular credit cards. They also brand then with word like Visa Gold, Visa Platinum or Visa Titanium. They also have many other products added on to them.

What Incentives and Features are offered?

• Cash Back
• Frequent Flier miles
• Gift Certificates
• Car Rental Insurance
• Travel Accident Insurance
• There are other products they offer but that will be at an extra cost to you.

Where is the Information about Credit Cards?

• You will find it on the internet, magazines and newspapers.
• The federal Reserve system surveys credit card companies every 6 months
• Under Federal Law, all solicitations and applications for credit cards must include certain key information, in a disclosure box similar to the one below

Annual Percentage Rate(APR) for Purchases	0% until October 2009 after that 19.9%
Other APRs	Cash Advance APR: 16.5% Balance Transfer APR:16.5% Penalty Rate: 23.9%*
Variable Rate Information	Your APR for purchase transactions may vary. The rate is determined monthly by adding 6.5% to the prime rate
Grace Period for Repayment of balances for purchases	25 days on average
Method of computing the balance for purchases	Average daily balance(excluding new purchases)
Annual Fees	None
Minimum finance fee	$1.50
Transaction fee for cash advances: 3% of the amount advanced Balance Transfer fee: 3% of the amount transferred Late Payment fee: %$25 Over the Limit Fee: $25

So compare tables from different credit cards and then you will get to see the real difference between credit card offers.

Liability Limits:

If you credit card is stolen or lost and then is used by someone without your permission you do not have to pay more than $50 of those charges. This protection is provided by the Federal Truth in Lending Act. You do not need to buy this so called Credit insurance to cover amounts over $50.

I hope this will clarify a lot of things, when you are looking to apply for a credit card.