Comparing Credit Cards

Credit card comparison table

What questions would you ask if you received the following credit card offers?

Offer 1

Super preferred credit card
1% APR!!!
No Annual Fee

This offer has a promotional APR. While a 1% APR sounds good, if you read the disclosure, you will notice that the low APR expires 6 months after you open the account or if your monthly minimum payment is late. After that, the APR jumps to 24%.

The disclosure also informs you that the grace period only applies if you pay your balance in full every month. If you carry a balance, there is no grace period.

Reading the fine print, you also find out that while there is no annual fee, this credit card has an expensive late fee ($30) and an over the limit fee of ($30). You will also be charged $25 if you or the credit card issuer closes the account.

Offer 2

Super Secured Credit Card
No Credit? No Problem!

This is an offer for a secured credit card. That means that you must open a savings account at the bank to obtain the credit card. You will not be able to access this savings account as long as the credit card account is open and you have a balance. This might be a good way to establish credit history but it is important to read the disclosure and make sure you are getting a fair deal.

Here again, the grace period only applies if you pay the balance in full every month. If you carry a balance, there is no grace period.

After reading the disclosure, you learn that the APR is 19.9% and there is an annual fee of $35.

Offer 3

Super Unsecured Credit Card
APR 19.9%
Sign up for just $5 a month!

After reading the disclosure, you learn that this card has an annual fee of $50 in addition to the $5 monthly fee. You would have to pay the issuer $110 a year just to carry the card.

The disclosure also informs you that you have to pay an acceptance fee to open the account and a program fee totaling $125. If you opened the account, your first bill would be $180 ($125 program fees + $50 annual fee + $5 monthly fee) without even making a purchase. This type of offer is usually made to people who have a poor credit history.

You can see that it is important to read all of the terms and conditions and make sure that you understand exactly what fees and rates will be charged to you. The next time you shop for a new credit card, you may find it useful to use the table included at the end of this booklet to compare different offers.

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