Comparing credit cards is important because it helps you make an informed decision about which credit card to apply for. However, there are some key mistakes that people commonly make when comparing credit cards that end up costing them money.
1. Comparing Cards on Sites That Only Show You Offers From Their Partners
Some sites will only display credit cards whose issuers they have a business relationship with. If you compare credit cards on those sites, you won’t be able to see the full spectrum of cards available to you, which could lead to you missing out on some of the best offers.
WalletHub lets you compare all of the best credit card offers on the market, whether their issuers are WalletHub advertising partners or not.
2. Comparing Card Terms That Will Never Affect You
When comparing credit cards, you should prioritize the terms and features that are most relevant to you, such as annual fees, credit score requirements and rewards. APRs are also important if you plan to carry a balance, but not if you plan to pay in full every month.
You shouldn’t get hung up on terms that won’t matter to you. For example, there’s no point in comparing cash advance fees or balance transfer fees if you never plan to use your card for either.
3. Not Having a Clear Plan for How You Will Use the Card
The most important question to ask yourself before comparing credit cards is what you want to use your credit card for. Some cards are best for building credit, while others are better for financing big purchases. There are other cards that offer rewards for everyday purchases or travel, too.
Once you determine the primary purpose of your credit card, that will narrow down your choices considerably.
4. Not Checking Your Credit Score Before Comparing
If you don’t know what your credit score is, then comparing cards is pointless because you won’t know which ones you stand a good chance of qualifying for. You can check your credit score for free on WalletHub and then use that to narrow down your choices.
Just meeting a card’s credit score requirement won’t guarantee approval, but it’s one of the most important factors in determining whether you’re approved or not.
5. Applying for a Credit Card Before Comparing it to the Alternatives
Individually, credit card offers can seem very enticing, especially if you get a targeted offer in the mail. However, it’s important to realize that even a really good sounding deal may not necessarily be the best choice available to you. Comparing credit cards lets you see how an individual offer stacks up against the whole market, and can help you figure out what is really worthwhile.
It’s better to take the time to do a credit-card comparison than to apply for a card only to get disappointed when you find a better offer shortly after.
6. Assuming Credit Cards With Annual Fees Are Not as Good
Some credit cards charge annual fees, while others do not. You might be tempted to think that going for the less costly option is always better, but that’s not the case. While some credit cards are overpriced for what they offer, others provide rewards and benefits whose value far exceeds the cost of the annual fee.
If you’re a big spender, it’s likely that you can find a rewards card that will enable you to earn enough to more than cover the cost of the annual fee. If you don’t plan to use your card very often, it may be better to go for one with a $0 annual fee.