When you’re choosing a credit card, you should know which features are most important ones to consider. Comparing credit cards based on these features lets put two credit cards side by side and tell which one is the best.
Interest Rate
The credit card interest rate is arguably the most important credit card feature. Interest is one of the main ways credit card issuers make money, so you have to pay attention to the interest rate you’re being charged. Lower interest rates are better because it means you won’t pay a high cost for carrying a balance on your credit card. If you don’t carry a balance on your credit card, the interest rate is less important, but few people actually pay their balance in full every month.
Credit Card Fees
Fees vary by credit card, but all credit card issuers are required to list credit card fees in the credit card disclosure they give you when you apply for the credit card. Common credit card fees are the annual fee, late fee, over-the-limit fee, returned check fee, and foreign transaction fee. Most these fees can be avoided depending on how you use your credit card. If your credit card charges an annual fee, make sure the credit card gives you some type of benefit commensurate with the fee.
Credit Card Rewards
Some credit cards let you earn rewards on your purchases. Typical rewards are cash back or a credit to your account balance, points that can be redeemed for merchandise, or miles that can be used to purchase airline tickets. If you sign up for a rewards credit card, make sure you get a good deal on the amount of rewards you earn and the number of rewards you must accumulate before you can redeem them. Review any stipulation on the rewards, like a minimum spending balance or reward expiration.
Credit Limit
The credit limit is the amount you can charge on your credit card before you’re hit with an over-the-limit fee. Recent changes to the credit card law requires you to give the credit card issuer permission to process transactions that would put you over the limit. If you don’t opt-in, these over-the-limit transactions would be declined. Some credit card issuers have eliminated over-the-limit fees, but not all have, so make sure you learn about any over-the-limit fee before you start using your credit card or agree to opt-in to over-the-limit transactions.
Pay Attention to Important Features
Any time you choose a new credit card or use one of your existing credit card, make sure you review the credit card features so you know how much you can spend and what you’ll have to pay.
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