Final answer:
When comparing credit cards, factors such as interest rates, credit limits, fees, rewards programs, and credit rating are typically considered. Interest rates are especially important as they determine the cost of carrying a balance. Market forces like demand and supply influence availability and pricing in the credit card market.
Step-by-step explanation:
When comparing credit cards, the factors typically considered include interest rates, credit limits, fees (such as annual fees, late fees, and over-limit fees), rewards programs, and any introductory offers such as a 0% interest period. Interest rates, or the cost of carrying a balance on a credit card from month to month, are particularly crucial as they can significantly impact the overall cost of using credit. A borrower's credit rating is also an important consideration for banks, as it helps determine the interest rate a borrower will receive based on their history of repaying loans.
For instance, someone with a limited credit history might start looking for a credit card from their bank or at a department store or gas station, where cards might be easier to obtain but may have higher interest rates. The bank will consider factors such as savings, investments, and the borrower's overall creditworthiness before extending a credit offer.
In the credit card market, economic principles such as demand and supply dictate the dynamics of interest rates and the availability of credit. For example, if a law imposes a price ceiling on credit card interest rates making them lower than the market equilibrium rates, it can cause demand for credit to rise and supply to fall, leading to credit shortages where consumers willing to pay the usual rates might not be able to obtain credit cards.