Credit Card Tutorials

What to Look for when Comparing Credit Cards

The purchase of any item should involve careful consideration and comparison shopping methods. Shopping for financial services such as credit cards is no different. There are many aspects which should be taken into account when comparing credit cards.

APR
APR is defined as the annual percentage rate that is associated with the card. Cards with a lower APR are available to those consumers that have a higher credit rating as the risk associated with the lender is lower. Most often, the credit card with the lower APR is the one that consumers are going to choose.

Introductory Offers
Introductory offers vary from company to company but often entail lower interest rates, or even zero interest rates for a period of twelve to eighteen months. This zero percent APR is available on balance transfers and purchases throughout the introductory period. Be sure to determine any fees that are associated with the balance transfer (which are often a standard of 3% of the balance that is being transferred to the credit card).

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A Comparison between Credit Cards and Debit / Charge Cards

A lot of people especially for those who are new to credit cards are wondering about the differences of a credit card and a debit card. Although they are both used for purchases using a card, they are totally different from each other.

A credit card has a credit limit amount, which is determined by your credit card provider. When you use your credit card to purchase something from stores or even online, you technically haven’t paid those items yet. What happens is the merchant will bill your credit card provider and they will pay the merchant for those items you purchased. Your credit card provider will then bill you after 30 days and it is your time to pay the creditors. Most of the creditors ask only for a partial payment so it is not that hard in your pocket, but the remaining balance will incur finance charges and that is how the bank earns money from you. If you have the money and can pay the whole amount on your bill, you will be charged with interest as long as you pay within your billing cycle.

Debit cards are almost the same with credit cards. The merchant charge your credit card provider for whatever purchases you made and in turn, you will pay your credit card provider. The difference is that you need to have funds on your debit card before you can make a purchase. So you need to deposit money to your debit card account before using them.

Having a credit card can help you purchase something even you don’t have the money at hand by the time of purchase as long as the amount is not over your credit limit. You can wait for the billing statement before you make the payment and you also have the choice whether to pay it in full or partial only. The problem that most of the credit card owners are they spend way too much that they can afford and when the time to pay the bills, it hard for them even to make the minimum payment and may cause your account to be delinquent.

The advantage of a debit card is that you know what you can only afford. You can control your purchase and not overspend. You will also don’t have to worry getting finance charges or other fees on your account. The disadvantage of course is you can’t purchase something you want if you don’t have the money.

Both having a credit and a debit card can be an advantage if you only manage your accounts properly. Avoid overspending, ask yourself if you really need a certain item or you just want them thinking that you have a credit line and you can pay them later.