At some point in their lives, everyone will require a credit card.
You may like to be financially secure, or you may desire a smooth payment system.
Your holiday objective may be to accumulate unlimited travel points or simply to obtain the best of both worlds in terms of spending and saving.
Choosing the right card, on the other hand, is a difficult task.
Comparing credit cards for the best benefits can feel like finding the correct foundation for your complexion.
Why?
Because there are so many options with so many comparable qualities!
Here are crucial aspects to consider when comparing credit cards to make your decision a little easier:
- You must be able to build an excellent secured credit Canada profile by using your card!
- If you’re paying a good annual fee, you must be able to earn good reward points in return.
Here’s everything you need to know:
What Should You Compare While Choosing Credit Cards?
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To correctly compare multiple credit cards, you must first identify what features are important to you and what constitutes a good bargain.
Although, there is no such thing as the ideal credit card for everyone because everyone’s financial priorities are different.
For example, if you’re looking for a secured credit card with free rewards and a credit repair service, a travel credit card with free miles and points won’t be useful to you.
Let’s discuss the basic features you can compare while choosing the credit card:
Types Of Fees
You might think of annual or monthly fees when it comes to maintaining a credit card.
However, there’s more to it! According to CNBC TV18, a credit card can have the following charges:
- Financial charges
- Interest fee
- Late payment fee
- Withdrawal fee
- Annual fee
- Over limit fee
- Foreign currency transaction fee
- Balance transfer charges
You might even have to deal with multiple other charges depending on your credit card company.
So, what you must compare is the amount you have to pay.
But, also confirm there’s no hidden and underline fee you don’t know about.
Ask your credit card company about all the fees you must manage at any time while using your credit card, so there’s no surprise even if you want to change or close your account.
Interest Charges
It is the additional fee you have to pay in case of late or missed payments.
However, the interest rate is different for every company.
You might get a good deal depending on your credit score range, but it really depends on your card policy.
Moreover, interest rates also depend on the type of transaction you make.
For instance, you might pay 21% interest on your everyday purchasing and 24% on your cash advances.
In fact, the rate might also increase if you have a retail credit card or your company offers multiple incentives.
Note: If you borrow advances from a reliable money lender, the rates and charges might differ depending on their policy and terms.
Introductory Rates
Introductory rates are some of the top incentives you can get from a new credit card.
It is the interest rate discount (usually 0%) you can get for a set time when you first get a credit card.
How much discount you can get depends on your credit score or the company’s policy.
Moreover, if you have good creditworthiness, you might get a low-interest rate after your introductory period finishes.
- If you have a good score, your 0% introductory rate might be as long as 6 to 12 months.
- You must look into all the credit cards that offer good rates to compare which offers the longest period.
Pro-tip: Study the credit law in your area to know if there’s any set period legally you can get to enjoy the 0% APR.
Rewards / Bonuses / Loyalty Points
Each credit company offers several rewards and bonuses you can enjoy throughout your credit card journey.
Of course, what level of reward you can get depends on your credit rating and history, but there are some basic points every company has to offer.
According to Investopedia, basic rewards you can get include:
- Free travel miles
- 0% APR introductory period
- Low-interest rate
- Cashback offers on specific or all purchases
You might be able to avail all these rewards altogether or some of them based on your type and company of credit card.
Of course, rewards and bonuses play an important role in comparing credit cards, but you should not make your decision only based on this.
Annual Percentage Yield
It is the amount your amount-bearing credit account made over a year’s time span.
The interest rate on a credit card is the money borrowed.
The interest rates on credit cards are usually expressed as annual percentage rate or APR (an annual percentage yield rate)
CFPB explains one can avoid high APR by maintaining the account’s balance.
For instance, you must pay your balance in full each month to avoid charges.
APY or annual percentage yield can come in handy if you want to open a savings account.
Depending on the kind of savings account, the APY can be variable or set.
The annual percentage yield (APY) on a savings or money trading account is frequently changeable.
Repayment Charges
Lastly, what you need to repay in case of a late or missed payment is also critical while comparing credit cards.
For example, some companies might spike the interest rates by 2% to 4%, while others push you to pay quite a lot.
For instance, if your interest rate was 19%, the repayment charges may increase to 27% or even more.
When a credit card payment is overdue for more than 60 days, the credit card company normally charges a penalty interest rate or repayment rate.
Many credit card firms charge a penalty rate of as high as 30% of the overdue bill amount.
What Is The Most Important Thing To Compare In Credit Cards?
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Two factors should be considered when comparing credit cards: fees and advantages.
Make sure to compare cards that are similar to one another, such as cards with the same credit score range.
Points, cashback offers, and travel miles are the most common rewards and bonuses.
However, there’s more to comparing credit cards than the abovementioned factors.
Yes! Ultimately, it all depends on what you need your credit card for.
Here are some personal steps you can take to compare credit cards to get the best rewards:
Consider Your Financial Priorities!
The first step you need to take to start comparing credit cards is to set your credit priorities.
You must understand your financial priorities first, and only then can you effectively compare credit cards to decide and choose the perfect one for you.
- It’s vital to comprehend your individual financial profile before you start comparing credit cards.
- Moreover, you need to analyze your credit rating, credit history, and credit score to decide your type of credit card.
In fact, start by questioning yourself about your financial goals and demands. Here are examples:
Why do you need a credit card?
Ask yourself the reason you want to get a credit card.
If you’re comparing cards to decide on your first-ever credit card, you need to look for beginner credit options.
If you have a bad credit score and want to improve it, you need to search and compare options for credit rebuilding credit cards.
Similarly, if you want to open a savings account, you must compare those credit cards.
That’s why it’s important to understand your financial priorities first before starting your credit card journey.
Can You Afford To Pay?
Right when you understand your financial priorities, the next thing you need to do is analyze and really comprehend if you can handle getting a credit card?
Especially if it’s your first credit card, you need to think through everything before comparing and then opening your credit account.
On the other hand, if you already have a credit card and are only looking for a new credit card to improve your financial stability.
Then, look at your current account’s balance and credit history and decide whether or not getting new is a good option at the moment.
How To Compare Credit Cards?
If you are reading this line, that means you have already done reading and understanding the above points.
But is only searching online and making a personal comparison enough to make the decision?
Probably yes, if you’re looking for a credit card just for trivial daily purchasing and not something big like building a credit history for a good mortgage or insurance.
So, what options have you got besides doing a personal evaluation?
Let us tell you!
Ask Your Legal Representative!
Surely, you can weigh every advantage and disadvantage of getting a credit card after researching online, reading reviews, and visiting their website.
But sometimes, your personal research is not enough.
- A financial advisor can guide you better on legal terms and hidden charges.
- If you are struggling with your credit, your consultant can help you find ways to build good credit.
In fact, if you have done all your research and just need confirmation or legal advice, you can still ask your advisor to compare things and give you a heads-up for getting your favorite credit card.
Use Online Comparison Websites!
Of course, you might read different blogs with charts and tables comparing endless credit cards.
But, the terminology can be too overwhelming if you are a beginner.
In that case, using an online comparison service can greatly help you through the process.
To examine what various credit card companies have to offer, you can utilize the services of a credit card comparison portal.
- The comparison website can assist you in selecting the best card for you.
- If you already know your options, you can simply enter the card companies and other specific details to compare.
- If you have a blank state of mind, just use the website’s recommended options.
However, you still might have to specify your purpose of searching for a credit card like credit rebuilding, good credit history, rewards, travel miles, etc.
What Is The Critical Feature Your Credit Card Should Have?
The important features your credit card must have depends on what type of credit you prefer and what type of credit benefits you are looking for.
Generally, the cashback rewards are what most people are interested in while comparing a credit card.
So, let’s discuss it in detail:
- According to Experian, a cashback reward is something you can earn using a credit card in the form of cash and actually apply it to your credit bill.
- For example, if your credit policy is 5% cashback, you can earn $5 back on each $100 transaction you made with your credit card.
How To Smartly Use A Credit Card That Has Best Rewards?
Credit cards indeed provide endless benefits, but they can also ruin your financial profile and stability if you don’t know how to use them smartly!
So, to help you out, here are some tips you can use to maximize your credit rewards:
- Choose The Right Card: The first step to maximizing the credit rewards is by choosing the right card! The reason is that it can help you earn several benefits which can help you maintain a good credit profile!
- Compare Limited Offers: Some credit cards provide their customers with free credit services for a set time, so if you compare credit cards, you might want to look into it to get the best offer.
- Compare Welcome Bonus: Several credit cards offer welcome bonuses to their new customers in order to attract them with appealing credit incentives. However, you might need to spend a specific amount to earn your welcome bonus.
Bottom Line
Getting a credit card is an important decision in your life.
It can decide your financial stability and the future of your financial profile.
So, you shouldn’t take it lightly!