Reader Mail: How Do I Compare Credit Card Offers?

Now that I have a stable job and am geographically rooted for at least a few years, I decided to move all my money out of Wells Fargo and into a local credit union. It’s been totally awesome so far (no ATM fees, no minimum balance/charges on my checking & savings accounts, etc). The only thing keeping me tied to Wells Fargo at this point is my credit card. It was one of those cards opened during college for “overdraft protection” on my checking account, and (up until post-grad school unemployment) I had always used it pretty responsibly/sparingly, so I never bothered to get a different one. I’d like to sever ties completely with WF and transfer my balance (about $700-800) to a new card, but I have no idea how to choose one! Any tips/suggestions on how to compare card offers and get the best deal in terms of interest rates, reward programs, etc? — Saralyn

I pulled Saralyn’s question from the depths of my inbox because I promised her that I would after my column about credit cards went up earlier in the week. Since I am adverse to signing up for new credit cards, I’m going to tell you what experts have told me, but if there are readers out there who have had really great experiences with a certain card, please tell us in the comments section. 

Saralyn, if you use your credit card sparingly, and are not the sort of person who has a credit card for the rewards, you should look for a card that will offer you a 0% APR for your balance transfer for at least 12 months, with no annual fees. You should also make sure that the transaction fee for balance transfers is low. The standard balance transfer fee for credit cards is 5%, which means you might have to pay $40 to transfer your balance of $800, but you might be able to find cards with transaction fees of 3% or lower. Having a 0% APR for at least a year is great if your goal is to pay off your balance, and then keep your balance at 0.

But if your goal is to pay off that balance, and then become the sort of disciplined person who pays off her credit card in full every month, you might as well get a card that offers airline miles, cash back on purchases, or other rewards.

So how do you go about choosing a card?

First, I’d recommend that you check out Bankrate’s feature on credit card basics—it’s comprehensive, and will explain to you things like how credit card fees work, and what kind of card you should look for based on your lifestyle.

You can use Bankrate to look at cards, but Billfold pal Arielle O’Shea uses NerdWallet to compare credit card offers, and I also think NerdWallet is a great tool to compare cards. The site asks you what kind of card you’re looking for, and if you’re the sort of person who carries a balance, pays everything in full, or has bad credit, and it matches you up with the cards that are best for you.

Here’s what Stephanie Wei from NerdWallet tells us in an email:

“We provide customers with a much larger population of results, often compiled either through a painful process (for example I dare you to try to look for checking fees by banks; it’s very difficult due to how poorly fees are disclosed), or through some awesome programming we wrote ourselves. Most competitors out there only list stuff they get paid for, and you’ll see that we search through way more products for consumers (for example, we search through 1,600+ credit cards, most competitors only look through less than 100).”

So! The two key things to look out for: the APR and annual fees. If you know you’re going to carry a balance every month, focus your credit card search on finding the one that will offer you the lowest rate possible.

 

Photo: Flickr/Dinkel

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9 Comments / Post A Comment

thewurst (#435)

What about balance transfers in a larger sense? Let’s say one were to have two cards with fairly large balances and not so desirable interest rates, would it make sense to consolidate those two cards onto one with a balance transfer, then CUT UP the other cards? Is this even possible?

Mike Dang (#2)

@thewurst Yup! Last year, after a friend told me about a similar situation, he decided to transfer a $5,000 balance on one card, and a $4,000 balance on another card to a new card he opened with Citi that offered a 0% APR on transfer balances for 24 months (which was awesome), and a $14,000 credit limit. I think the transaction fee was 3 percent, so he had to pay $270 to make the transfer, but it was worth it for him because the interest rate on his other two cards were killing him every month.

Mike Dang! You are the best. I’m actually excited to head off to NerdWallet and Bankrate to figure this all out after work. Once I get the current balance paid off, I’ll definitely be paying in full every month (like I did before grad school).

chic noir (#713)

Will be looking to Nerd Wallet because I want airline miles card.

Thanks Mike:)

Hey, I just did this exact thing (almost)! I had WF for my bank accounts and credit card and left for a local credit union. I just got a new credit card with my credit union. I didn’t have a balance to transfer so I don’t know how difficult that might be but definitely consider getting a credit card through your new credit union.

acid burn (#113)

Here’s a sort of related question (as that website tempts me with cards that are better than my current Amazon rewards card): is it bad (for my credit score or for some other reason) to have open credit cards that I never use? Is that better than closing the account for some reason? I have a Nordstrom Visa that I opened at one point years ago because they conned me into it with the promise of store credit that I then misplaced until it expired. Anyway, I have literally never used this card. They just sent me a new card, which I didn’t activate either. The part of me that likes having a minimum of things to keep track of thinks I should close the account, but does it even matter one way or the other?

acid burn (#113)

@acid burn um, to clarify, I misplaced the store credit, not the card itself. The card has been sitting in my file cabinet since I got it.

Mike Dang (#2)

Keeping the card open is not going to hurt your credit score. Closing it might—only because it will reduce your credit limit, which might affect your balance to credit ratio (the more maxed out you are on your cards, the worse your credit score). If you’re closing this card, and replacing it with one with better rewards or a lower interest rate, that’s ok because the new card will get your limit back up, and your score will recover as long as you use your card responsibly.

km1312 (#213)

CREDIT UNIONS. They seem like a great idea maybe, but I don’t understand them!

Mike Dang/anybody?

Comments are closed!