Choosing a Credit Card Offer

With hundreds of cards on offer, few tasks, perhaps, are less daunting than shopping around for the best credit card. Where to begin?

It will help a lot if you first figure out the reason for obtaining a card before you start doing credit card comparison. The best credit card for you is the one that most closely fits your spending and lifestyle so think carefully about this. You can now use these to check how well each card meets your needs.

In looking for the best credit card deals, these things should be considered:

Interest rate. Look particularly for the rate that will be used to calculate the finance charges every billing cycle. Pay close attention to the default interest rate — the rate imposed when payments are late and credit limits are exceeded. This is higher than the nominal interest rate or APR.

Balance calculation method. If your going to carry a balance each month you not only need to aim for a low rate card but also check how interest is calculated. The methods that produce the lowest interest are the adjusted balance and average daily balance excluding new purchases.

Balance transfer opportunities. Offers of very low introductory rate for a specified period are intended to entice you to transfer balances from a competing credit card. Once the offer period ends the interest rate normally reverts to a much higher rate so check this. Using a credit card comparison website allows you to sort cards by interest rates.

Annual fee. Depending on the features or prestige of a card the annual fee can really vary. Be zealous in your credit card comparison to look for the least fee. To be competitive, there are many cards that do not charge any annual fee but the trade-off might be in higher interest rate, so check carefully.

Cashback. Cashback is a common reward type and can vary from around 0.5% right up to 3%. This does give you a welcome discount but if your plan is to carry a balance, the 1% discount will mean nothing compared to the 14% interest on your outstanding balance.

Late payment and other fees. If your payment comes in late, even for just one day after the due date, you’ll get hit with late payment fee. If you break a card rule then their are often other fees imposed. Credit card comparison is very important to look for the cards with the lowest penalty rates, over-limit fees, and other fees.

Rewards. The best credit card rewards programs require the least number of points to redeem the item you want. Look at the participating establishments where you can earn rewards points with the card, and make sure the places where you shop are included.

Credit Limits. Check how much credit will be allotted to you. Think about how you will use the card and how much on average yoy expect to spend on the card each month. You need to track your balance and be careful not to go above your limit. Look for a credit limit that’s about three times your expected amount of monthly purchases.

Foreign transaction charges. If you travel a lot and expect to use the card a lot overseas, check out and compare the applicable fees for foreign transactions and foreign exchange differentials.

Charges for ATM cash advances. Interest rates and transaction fees for cash advances are usually much higher than normal purchase transactions. You don’t want to make cash advances, but in case you will need to it is best to know in advance how much it is going to cost you.

Editorial by Richard at click4credit.com.au who compare products including Woolworths credit cards.