Find the right card with perks you’ll actually use.
All credit cards work in a similar way, allowing you to spend up to a certain amount and then pay it back over time, usually with interest charges. However, what often sets them apart are the additional features that allow you to save money or get extra value from the card. Some of these perks include a 0% intro APR period on balance transfers and/or purchases, rewards programs and more.
Understanding these different types of features can help you choose a credit card that’s right for your circumstances. Here, we look at what you need to know about both the basic and additional features that credit cards offer.
Credit card features to compare
These nuts and bolts features are common to all credit cards.
Your credit line usually depends on your creditworthiness and annual income. Based on these factors and the type of card you apply for, you can get:
- Minimum credit line. Most credit cards come with a relatively low minimum credit line of $200. This is the lowest credit line you can get with these cards. However, some credit cards, such as the Visa Signature cards, come with a high minimum credit line of $5,000.
- A credit line of your choice. If you apply for a secured credit card, you can choose your own credit line with the amount of money you deposit. This amount can vary from $200 up to $3,000. But with some cards, such as the Wells Fargo Secured card, you can deposit up to $10,000.
Welcome offers are designed to provide benefits to new customers for a limited time. Credit cards can have more than one of these value-adding deals:
- Intro APR period on balance transfers. Move your debt to a new credit card and get a 0% interest rate for an introductory period. You can save money on interest payments and use the extra money to pay off your credit card sooner. At the end of the promotion, a standard APR will apply to any debt remaining from the transfer.
- Intro APR period on purchases. Pay low or no interest for an introductory period when you use the card to shop and pay for services. Be sure to pay back what you’ve spent by the end of the intro period – your credit card repayments will increase if you’re carrying an unpaid balance.
- Bonus offers. Signup bonuses can come as cash back, frequent flyer or rewards points, and their value can be from $100 up to $1,000 or more. You can earn these offers when you meet certain spending requirements often in the first three months of card membership.
- $0 introductory annual fee. Some credit cards offer $0 annual fee for the first year. However, starting from your second year, you’ll pay an annual fee.
Security and fraud protection
Financial institutions protect your account in many ways, including:
- Zero liability. Credit card transactions are protected by the card issuer. Visa, Mastercard and American Express guarantee you won’t be liable for unauthorized transactions that you report to your bank.
- Anti-fraud programs. Banks, credit unions and credit card issuers all have teams to monitor your account for suspicious activity in real time. Your card can be blocked and any lost funds recovered.
Rewards and frequent flyer programs
Some credit cards let you earn rewards points for every dollar you spend, which can be an easy way to rack up rewards for using your card. The three main types to consider including:
- Cashback credit cards. These cards let you earn cash back on every purchase you make but depending on the card you choose, you can earn accelerated points on everyday purchases, such as groceries, dining and gas.
- Travel credit cards. This type of cards has the largest variety, including general travel cards, airline cards, hotel cards and cruise line cards. You can earn points or miles on your purchases, and you earn accelerated points or miles when you make purchases at the select brand of hotels, airlines or cruise lines. The points have the highest value when redeemed at the specific brand.
- Store credit cards. This type of card lets you earn the highest reward points on purchases made at the store. Also, the highest reward value comes from the store redemptions.
Most credit cards — and especially the premium cards — feature complimentary insurances for when you travel and make important purchases. The range of coverage varies but may include:
- Travel accident insurance. This generally provides coverage for death and dismemberment when traveling on a common carrier.
- Trip delay coverage. Some cards can reimburse you for expenses such as meals and lodging if your common carrier is delayed.
- Trip cancelation insurance. You may get coverage if your trip is canceled by sickness, weather conditions or other covered situations for your pre-paid, non-refundable travel expenses, such as passenger fares, tours and hotels.
- Lost luggage reimbursement. Some travel cards provide coverage for your bags when traveling on a carrier. If your bags are lost or damaged by the carrier, you can get reimbursement.
- Car rental collision damage waiver. When you pay your car rental with your credit card and you decline the car rental company collision waiver, your rental car is covered against damage or theft.
- Purchase protection. This covers items you buy with the card for theft, loss and damage. The value of the coverage and the time covered depends on the card.
- Concierge services. A credit card concierge can take the stress out of last-minute reservations and bookings when you’re at home or abroad. This feature is included with most travel credit cards.
What to watch out for
When choosing a credit card, it’s important to not only find one with features that serves your needs, but also one with rates and fees that serve your financial circumstances.
One of the main things to keep an eye on is your credit card’s annual percentage rate (APR). There are three types of APR:
- Purchase rate. This APR applies to most everyday transactions and ranges from around 9% up to 28%. You start incurring this interest if you don’t pay your balance when due.
- Balance transfer rate. This is the APR you incur on balances that you transfer from other accounts. Often it’s the same rate as the purchase APR. However, some credit cards offer a 0% intro APR period for transfers you make when you open your account, which can last for up to 21 months. After that, any unpaid balances will start accruing interest.
- Cash advance rate. This APR applies when you make a cash withdrawal from an ATM or if you make other cash equivalent transactions, such as buying foreign currency or gambling. Cash advance APR is almost always higher than the purchase rate, typically around 26% for most cards. Also, this APR doesn’t come with a grace period, meaning you start accruing interest from the moment you make the transaction.
Make sure you also consider these common costs of credit card ownership:
- Annual fee. There are many no-annual-fee credit cards that could be worth considering. However, if you want to get the highest welcome offers, highest rewards and benefits, a card with an annual fee is often the way to go. Just make sure the benefits outweigh the cost of card ownership.
- Cash advance fees. Cash advance transactions, such as ATM withdrawals, attract a cash advance fee that can cost up to 5% of the total transaction amount.
- Foreign transaction fees. Some cards charge a foreign transaction fee of 3% for every transaction made abroad. Make sure the card you take for your overseas travel doesn’t have foreign transaction fees.
- Additional cardholder fee. You may pay an additional annual fee for each supplementary card issued. However, this is often the case with more expensive credit cards.
Whether you’re looking for a new card or want to get more out of the one you already have, it’s important to understand your credit card features and its rates and fees.
If you’re looking for a card with the best combination of features for your financial needs, make sure to compare all credit card options.