What Factors besides Interest Rate and Fees should i Choose when Comparing a Credit Card

Some credit cards are better than others. I got a 0% interest rate as an introductory offer – but all introductory offers disappear eventually, and then you’re stuck with their standard rate. The first thing to ask yourself is whether you want this credit card for the short-term, or if you’re planning on using it for several years. If you’re just looking for a short-term credit card, maybe to transfer a balance while you’re paying it off, then you’ll want to shop around for the best introductory rate. But if you’re looking for a long-term credit card, then there’s more things to consider.

Obviously the most important thing to consider is still the long-term interest rate. Many people simply compare all the offers they’ve received, and then choose the one where the interest rate is lowest. In theory you can avoid paying that interest rate every month, just by paying off your monthly balance before that interest gets charged. But if you expect to carry that balance for more than one statement, it’s that interest which will determine how much of your hard-earned money ends up in the bank’s pocket!

One overlooked feature when comparing credit cards is the size of its annual fee. Some credit cards will charge you more than $20 each year, just for the privilege of having the card! That’s always seemed like a rip-off to me, so I always check to make sure I know what the rate is before I sign up. And when you’re shopping for a credit card, you can always ask the issuer if they’d be willing to sweeten their offer by waiving the annual fee.

Many banks also offer “rewards programs” to try to make their credit cards more attractive. Each purchase earns you points, and after you’ve made enough purchases you can redeem your accumulated points for gifts. Sometimes the gifts are simply another “gift credit card” with a fixed amount – say, $50 – so you’re actually getting a cash kickback. But to rack up enough reward points for a gift, you’ll have to make a lot of purchases. Ultimately I’ve never let a “rewards program” influence my choice of a credit card. The cash value of the prizes is rarely worth more than $100 a year. And if you can find a cheap interest rate, there’s a good chance you’ll save more money in interest costs than you could ever hope to earn by participating in the rewards program. (And there’s even a separate annual fee that’s often charged for enrolling in the rewards plan – so it’s actually possible to lose money paying out those annual fees each year while waiting to earn enough points to finally claim a reward!)