Understanding Credit Card Offers
The banks are constantly hitting us up with credit cards offers. With so many cards on the market, how do you compare credit card offers properly and find the best credit card available?
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. Look out for transfer fees which are upfront fees calculated as a percentage of the balance 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. Not all cards offer an introductory rate but if they do, just make sure you know what the interest will revert to at the end of the term and read the terms to ensure you’re not caught out with a big interest charge once the offer expires.
Purchase APR: This is the standard credit card APR charged on purchases. The right card for you is going to come down to how you will use the card; if you’re not going to pay your bills in fill then a low interest card will save you more than you would earn in points, however if you do pay in full then interest won’t be your main priority.
Interest free days / grace period: You may see offers such as ‘up to 44 days interest free’ advertised. This is the maximum period between making a purchase and the monthly bill due date. Look for cards with a long grace period as this will give you a longer period between making a purchase and the due date each month to avoid any interest charges. If there is no grace period the you’ll be paying interest from the day or purchase and you’ll be hit even if you pay your bill in full and on time each month.
Annual Fee: Many 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. Just make sure that the value of any extra features outweighs the annual costs of owning the card.
Rewards scheme: Rewards schemes come in all different shapes and sizes such as cash back, shopping rebates, points, airline rewards and much more. There is no point in applying for a credit card that will cost you more than it earns so work out of any rewards will earn you above and beyond what you pay the bank in 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.
Next time you’re looking for a new credit card you should have a good understanding of how to compare credit card offers side by side before you apply. 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
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Tags: apr, balance transfer, banks, best credit cards, credit card, credit card offers, credit cards, debt, rewards
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