Finding the Best Credit Cards

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Most people shop around for the best price on clothes, electronics, and airline tickets. But when it comes to credit cards, too often people forget how much they can save by comparison shopping. When it's time for a new credit card, be sure to look at the costs and terms, which can make a big difference in how much you pay for the money you charge.

Key Factors to Consider

Annual Percentage Rate (APR).
This is the percentage of your balance that you are charged if you do not pay off your balance each statement period. This rate may vary for different types of transactions. For example, you may be charged one rate for purchases and a different rate for cash advances.
Finance charges.
This is the amount you will be charged to use credit. It is calculated based on your outstanding balance and the annual percentage rate.
Annual fees.
This is the fee you are charged one time per year for the privilege of having a credit card. Some cards do not charge annual fees.
Grace period.
The number of days between the statement date and the payment due date during which you will not incur finance charges for paying your bill.
Many cards now offer rebates, awards and other incentives to have you sign up for and continue using a particular card.
Other factors and fees.
You will also want to know what the policies are on things like late payments, over limit fees and cash advances. Some of these items will result in additional charges on your credit accounts while others may impact your interest rate.
Reward programs.
Many credit card companies have reward programs where you earn points for every dollar that you charge on a credit card. You can redeem those points at online stores, airlines or even get cash back.
Credit limit.
Most credit card companies offer low credit limits. The average credit limit is $2,500 for a person with a good credit history.

Choose What's Right for You

Evaluate all of these factors together to determine the best credit card for you. For example, if you don't regularly pay off your balance, you will want a credit card with a lower APR. If you do pay your balances regularly, you may want to look for a card with no annual fee or one with an appealing reward program.

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