How To Comparison Shop for Credit Cards

It’s easy to find someone who wants to give you a credit card, but you have to be smart to get a good one. Let’s get smart. Always take a look at the Schumer box. What’s that? By federal law – sponsored by Senator Charles Schumer – all credit card offerings have to include a box that includes nine different kinds of information about the card. This box will appear on the credit card offer and is required to highlight certain provisions regarding the terms and conditions of a credit card offer. Here are some of the key pieces of information about the credit card and its required disclosures that will allow you to compare one offer with another. The Annual Percentage Rate or APR. This is confusing because card issuers can have introductory rates that become a higher standard rate. And then they can raise the rate if you miss a payment. If there is an introductory rate, both the introductory rate Apr and the APR that applies after the time of the introductory rate. Some cards have variable rates. Make sure you know what the variance is based upon. The variable rate information regarding how it is determined must be disclosed. Assume that you just can’t compare the APRs on two cards because there is a story behind the numbers. They can also charge different interest rates for purchases, balance transfers, and cash advances. Other APR’s. The APR for activities such as: Cash advances, Balance transfers and the Penalty rate if you are delinquent on the account. The Grace Period. This is the number of days you have to pay your bill in full without getting a finance charge. The Finance Charge. This is the dollar amount you pay to use credit, and it depends in part on your outstanding balance and the annual percentage rate (APR). Some cards have a minimum finance charge. The minimum fixed finance charge must be disclosed on the agreement. Card issuers use different methods to calculate your outstanding balance. Your outstanding balance may be calculated over one or two billing cycles; including or excluding new purchases in the balance and by using the adjusted balance, average daily balance or previous balance. The Outstanding Balance Computation. As we said above in the section on finance charges, cards use different methods to come up with your outstanding balance. You may read it and scratch your head, but makes sure that you read it. The Actual Company Offering You Credit. Sometimes this is not the same company who is marketing the card. If you recognize one name and not the other, it may make a difference. The Annual Fee. Some cards require a fee to be paid every year. Why? Because they can. If you can get a card without an annual fee, get one. You’ll probably save at least $50 a year. Otherwise, the annual fee is an amount charged for each 12 month period for having the card. The Minimum Payment. Different issuers use different calculations to determine the minimum payment. It’s good to know what the minimum payment is, but if this become important to you, you are struggling. If you are only making minimum payments you are probably paying a lot in finance charges. The Credit Limit. The credit limit tells you the total amount of credit that you have. Know what’s best for you. A low credit limit may be good for you if you are undisciplined in your spending and need to be reined in. A high credit limit is good for your credit rating if you do what you are supposed to do and always keep the balance under a third of your total available credit. Fees for Credit Insurance. In addition to the credit card, companies also try to sell you insurance for a lost card, or insurance for disability, or insurance to pay your balance in the event of your death. Most of the time insurance isn’t necessary, but if you are interested be sure you know what it will cost. In addition to the items appearing in the Schumer box required with the card offers, you may have other interests in a card. If you have good credit you may qualify for a reward card. Rewards cards can include cash rebates on purchases, online account access, frequent flyer miles, additional warranty coverage, car rental insurance, travel discounts, concierge services and more. It always makes sense to pay attention to the details of the cards you apply for.