Tips for choosing better low APR credit cards

by : Rachel Noga

With purchases via credit cards becoming as routine as cash payments, having a credit card has become an integral component in today's economy. But how do you figure out what makes one credit card better than another? Firstly, remember that all credit cards are not created equal. What this implies is that you need to read the fine print and shop around before you make your decision.

Annual Percentage Rate: One very important aspect of credit card desirability is the rate of interest or the Annual Percentage Rate (APR) that will be charged. Basically, APR is the rate at which interest is accrued on the unpaid balance of your card.

For example, if the APR is 20.0%, and you carry a $1000 balance for a year, you'll end up paying $200 (20 percent of $1000) of extra debt annually. This should make it pretty obvious why low APR's are preferable.

You can easily compare APR rates on the internet by logging on to web sites that specialize in comparing these cards. You can view a list of all the major credit cards (Visa, MasterCard, Amex, and Discover), and do an online comparison.

However, in order to derive maximum advantage from your credit card, you also need to pay attention to issues such as the fees and the grace period.

Fees: Usually, a flat fee is charged every year on your card. The amount differs from company to company, and card to card. So be sure to ask and/or check.

Grace Period: The amount of time a credit card company gives you to pay your bill before charging interest is referred to as the grace period. This period too, can differ from card to card, so remember to ensure that your card gives you enough time to pay your bill.

So when you compare the APR's of various credit cards, also remember to compare the fee and the grace period. A low flat fee combined with a reasonable grace period and low APR should ensure that you are getting a good value credit card.

These three steps cover the basics of shopping for a credit card. Remember, however, to read the fine print. Your card may spring surprises if you don't. Statements such as "Customer will pay x amount OR y amount, whichever is greater," are the culprits when it comes to getting nasty shocks. So don't skimp on your research!

In summation, to get a good deal on a credit card, you need to compare APR, fees, grace period, and read the fine print. This will cover the basic criteria for any credit card you purchase. Keep these tips in mind, and compare low APR credit cards to find the one that's right for you!