Trying to find the cheapest credit card may seem like a daunting task. It is indeed confusing to try and compare credit cards as there are numerous criteria you will need to assess. It is therefore necessary to understand what the cheapest credit card actually means.

First it is a good idea to consider what the key criteria are. For credit cards the key feature to assess is the APR. This is the annualised interest rate charge on borrowings, so the lower the cheaper the credit card all other factors equal. Typically the cheapest credit cards currently have APR’s of approximately 17% (date of writing 10 July 2010).  With credit cards, the borrowings are unsecured i.e. the lender does not have any collateral pledged by the borrower as security over default. This is principally why lending on credit cards is significantly higher cost than on mortgages where the house itself normally serves as collateral for the loan.

Other key features that you may benefit from, and therefore may determine whether the credit card is cheapest, include 1) availability of free balance transfers, 2) number of months of balances prior to interest rate charges setting in, and 3) any other specific offers of the credit card provider, such as deals on foreign exchange and specific store deals.

Whilst the APR is the key determinant of which credit card is cheapest, you should consider your lifestyle i.e. whether you would make significant benefits of the offers presented by the card provider which would make the credit card cheaper. If you are an individual with significant balances on other cheap credit cards, what are the balance transfer terms on the credit cards on offer?

Price comparison websites really are your best port of call if you want to compare multiple credit card criteria simultaneously to determine which are in fact the cheapest credit cards for you.