How do you Really Compare Different Credit Cards?

Everywhere you look for advice on applying for a credit card tells you the same thing - compare credit cards to be sure that you're choosing the best one for you. What you REALLY need is practical advice to help you compare, not just to each other - but to the way that you handle your finances. There are all sorts of different kinds of credit cards, and comparing with each other can be a little like comparing apples with car wheel covers, unless you first sort out which type of credit card you should apply for.

Here are some tips on choosing the right kind of card and what to compare, after you have.

Your spending style:

I can pay for everything I buy next month.

Your preferred cards:
If you're the type that only buys when you know that you can cover the full charge by the next pay date, then you've got a wide range of choices in credit cards. The APR isn't quite as important, since you'll seldom carry a balance that incurs interest. You'll also have an excellent credit rating, so you'll have your pick of credit cards.

Look for:
A rewards card that pays you cash back, or a charity card that puts a little something in the till for your favourite causes. Your diligent spending habits have earned you the right to a little reward, whether it's savings at the petrol pump, airplane miles for holiday travel, a lovely cheque around holiday time, or that good feeling that comes from doing good.

Your spending style:

I want it now, but I can?t pay for it all at once.

Your preferred cards:
You want it now - and you're willing to sacrifice other things for a few months to pay it off once you get it. Since you'll be carrying a balance from month to month, the APR (annual percentage rate) should be a major comparison point for you.

Look for:
A low APR card with a small (or no) application and annual fees. Be sure to compare the fees and penalties for late payments, as well as any other fees that you may incur.

Your spending style:

I have no credit at all, and need to establish some.

Your preferred cards:
With no credit history, your card choices will be a little more limited since issuers have nothing on which to base an estimate of how you'll handle your credit. You'll probably have to accept a slightly higher APR than the best cards available, at least until you prove that you're credit-worthy.

Look for:
A credit card with a low spending limit and a low interest rate. Use it carefully, and be sure to make at the very least the minimum payment every month.

Your spending style:

I don't spend money I don't have, but want the convenience of paying with plastic.

Your preferred cards:
A prepaid credit card may be the best choice for you. Technically, it's not a credit card - it's more like a debit card without a bank account attached. You 'load' the prepaid credit card by paying at the till at a merchant or from another credit or debit card, and then can use it just like any other debit card. There's no interest fees, since you're only spending your own money, not borrowing at all.

You can learn more about different kinds of credit cards at moneyeverything.com, where you can compare credit cards and find the best credit card choice for you.