Credit Card Offers Explained

The banks are constantly hitting us up with credit cards offers. So how do you cut through the marketing spin and actually figure out the difference between the credit cards and pick the best credit cards for your needs?

In order to compare credit cards you should understand the main features found in most credit card offers.

Balance Transfer APR: APR stands for annualised percentage rate and is the equivalent annual interest rate. With a balance transfer the APR is the rate that applies for an introductory period on balances you bring across from existing store or credit cards with outstanding balances. Watch out for transfer fees which are normally charged as a percentage of any balances transferred.

Introductory Purchase APR: This is the interest rate that you will pay on purchases for a promotional period once you take out the card. Don’t get caught out by these intro offers, check out the small print to see that you won’t get stung if you still have balances owing when the offer period expires.

Purchase APR: This is the standard credit card APR charged on purchases. If you don’t think you will pay your bills off in full each month then a low interest credit card rate will be important while if you will pay your bill in full each month then you may not pay any interest so the rate is less of an issue.

Interest free days / grace period: You may see claims such as ‘up to 44 days interest free’ advertised. This is the time period from making a payment until the bill is due. Cards with a long grace period mean that if you pay your bill in full before the due date each month then you won’t pay any interest. Some cards have no grace period on purchases and most cards have no grace period for cash advances and in this case, interest is charged from the day of purchase or advance.

Annual Fee: most cards have now dropped their annual fees but you may find that some premium cards do still charge an annual fee in exchange for extra features. Alwats ensure that the value to you of extra features such as insurances are greater than the annual card costs.

Rewards scheme: Rewards schemes come in all different shapes and sizes such as cash back, shopping rebates, points, airline rewards and much more. Do some basic math before you apply and calculate if the rewards your liekly to earn will be greater than the interest and fees. Also choose a card that offers rewards that you want. Most rewards programs offer rewards that average around one cent in value per dollar spent so don’t spend up just to earn some extra points, it’s simply not worth it.

Now when you come to look for a new credit card you can cut straight through all that marketing hype appliead to card offers and pick a card that is right for your needs. There is no card that is the best for everyone; you just need to pick a card that will work for you.

This article is by Richard Greenwood a keen consumer advocate helping consumers getting a better deal. Richard runs www.compareyourbank.com.au

Originally posted 2009-06-30 20:39:56.

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