When you Compare Credit Cards Beware of Honeymoon Offers and Other Traps

If you're looking for a new credit card online you'll probably spend some time on personal finance sites making credit card comparisons, so that you can identify a few of the ones that match your spending and financial habits. When you compare credit cards the issuers are very seasoned at making attractive offers that leap off the page at you and get you excited by how much you will save or how much shopping you can do at 0% interest but beware! Read the small print on these deals.

So-called honeymoon offers are those that credit card issuers will advertise for a limited period such as 3 or 6 months. You will need to see what the interest rate is after that period as it can be extremely high and can wipe out any savings you made during the no interest period. Also check what other fees and charges are attached to the offer. If you see a card offering "no fees for 6 months" or similar also check what happens after that period. They may be attractive on the face of it when you compare credit cards, but you need to factor in how the card will work for you on an ongoing basis, not just for the next 6 months.

Another potential trap to beware of when you do your credit cards comparison is the cash back offer. This is where the issuer pays you back some credit to your account either directly or as part of a rewards program, for using your card. This may be a decent offer if you manage your finances well and ensure that you pay pack the debt on time, but if not the penalties can be very harsh with high interest rates applied. You definitely need to consider how strict you are with your personal finance before opting for one of these offers, no matter how attractive they may look at first when you compare credit cards.

Balance transfer credit cards can be a debt trap too, if you are not financially disciplined. A 0% balance transfer offer can be a great plus for you if you want to aggregate several debts on to one card – so you use the 0% interest rate to pay off the other debts and then try to pay off the new debt before the zero interest rate expires. However, if you use the card for another purchase during this period you may be hammered by a high interest rate and a zero interest-free period, so you may wipe out the savings you made by transferring the debt in the first place.

When you do your credit cards comparison it's worth remembering that credit card companies make their money from people not managing their finances well and spiraling down into a debt cycle. If you want to avoid that then read the fine details of offers – if they look too good to be true, they probably are!

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