A Beginners Guide To Low Interest Credit Cards
By shopping around for low interest credit cards it is possible to save yourself large amounts of money, particularly if you have a tendency to carry a balance over from month to month. Here we look at the benefits of low interest credit cards and what to look out for when shopping for cards of this type.
For many families up and down the country, money is tight. Saving just a few dollars every month is always welcome, and one way of doing this is by shopping for low interest credit cards, and transferring the balance from your existing credit card once you have been approved for one.
What constitutes low interest? Although there are no set parameters, low interest credit cards are generally those that charge less than 10% APR. APR stands for Annual Percentage Rate, and refers to the rate of interest that is charged on the annual account balance.
Although there are other factors to be taken into account, generally speaking, the lower the APR, the less interest you will pay. If you were to owe a constant balance of $1,000 on your credit card, a card that carries a rate of 14.9% APR would (in theory) charge you $149 interest over the course of a year. A card that carries a rate of 6.9% APR would charge you $69 interest per year on the same balance.
As you can see from the above basic example, low interest credit cards can save you a considerable amount of money. There are however several other points to take into consideration when shopping for cards of this type:
Firs, is the low APR a temporary offer? An introductory offer may provide you with a 4.9% APR on purchases, but this figure could jump to 19.9% APR after six months. Make sure you read the terms and conditions of the offer before applying.
The same applies to balance transfers. Some of the best value credit cards offer a 0% APR balance transfer facility, usually for a specified period of time such as three, six or nine months, or even for the lifetime of the balance. Although cards of this type can save you considerable amounts of money, it is also important to check the standard rate of interest that these cards charge.
You should also find out what fees and charges are made on a monthly and annual basis. Some low interest credit cards will entice you with sub-10% APR, but charge you a $99 annual fee for the privilege. Also keep an eye out for monthly maintenance fees, one-time set up fees and other hidden charges.
Although low interest credit cards can save you considerable amounts of money, unfortunately they are not aimed at everyone. Generally speaking, these cards are targeted at consumers with good credit scores, who do not represent a big credit risk to the lender.
If you have a low or medium credit rating, it is suggested that you build your credit score before applying for low interest credit cards. You will likely be turned down for cards of this type, which will result in a further decline in your credit rating. Take your time, build your credit history, then reap the rewards.
For more about excellent credit cards with a low interest rate visit us and we also have information about pre-approved credit cards.