by Katerina Nikolas

Created on: June 09, 2010   Last Updated: September 01, 2011

When comparison shopping for a credit card the crucial thing is to find one which meets your personal needs. Ideally a credit card will have no fees, a low APR, a generous cash back program and rewards points. Whilst you may want all these features you may not be able to get them all, depending upon your credit score. Realistically people are restricted to cards which match their credit score and may need a card for a balance transfer, to build credit, to use for travel, everyday spending or just for emergencies.

When looking at any credit card you need to look beyond any headline offers which are often misleading. Failure to read the agreement can lead to surprise when two missed payments on your card lead to the bank increasing your interest rate from the excellent zero percent you signed up for, to the penalty rate of 29%.

Other cards offer cash backs of 2% which when you read on only apply to a certain store, and the cash back everywhere else is a meagre 0.25%; not what you were anticipating. Maybe you are delighted to not be charged an annual fee even though you have bad credit: beware you could be about to sign up to a monthly processing fee.

Whilst headline offers can undoubtedly be misleading it is up to the consumer to appraise themselves with the contents of the terms and conditions before signing. Take your time to do this and you may soon spot some glaring discrepancies between your expectations of the card and its reality.

If you know that you are the type of person that will always clear your monthly balance in full then you can afford to be completely indifferent to the APR. However if you expect to have a running balance, or only service your balance with the minimum payment, the APR should be your primary consideration, as every cent which carries over into the next billing cycle will be charged interest.

Interest rates vary immensely between cards, from 0% to around 30%. New reforms have ensured that new introductory offers of low rates cannot be raised outside the agreed period unless you miss two payments.  However if you are a tardy payer a penalty APR will be applied on top of the late payment fees. Realistically if you think it is even a remote possibility that you will miss payments then you aren’t ready to handle a credit card.

Once the initial introductory APR offer has run its natural term then you will be moved onto the cards variable APR. Although you have no way of knowing what that will be one

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