Ever wonder why everyone seems to have different interest rates on their credit cards? There could be hundreds of reasons why you are paying more than someone else. Age, bad credit, no credit, or a poor credit history often plays into this dilemma.
Our FREE credit card chaser can help you to compare interest rates on many different types of credit cards!
Interest rates are everywhere. If you have any type of credit, there is an interest rate attached to it. Sometimes it seems that you cannot decrease your credit card balance because your interest rate is eating into your payments. Lowering your interest rate can be difficult, but it is not impossible.
To Have or Not to Have Credit
College students often pay higher interest rates on their credit cards because they have no credit. However, to establish credit, you have to play by the credit issuers rules. They assign an interest rate based on your credit history, or lack thereof. Once you prove that you are responsible and can make your payments on time, the interest rate can be lowered.
Senior citizens often pay higher interest rates. Most often seniors can expect rewards and discounts by using their credit cards rather than lower interest rates on their cards.
If you have bad credit due to missed payments or a series of late payments, do not expect a low rate. You may have to start from ground zero and build your credit score back up before you can request a lower rate.
Different Credit Cards Have Different Rates
Credit cards are not all the same. Cards with a variable rate are different than those with a fixed rate. A fixed rate does not change. A credit card with a variable rate is one where the rate is directly tied to an interest rate index, which means it can fluctuate.
Rewards cards offer points that can lead to cash back or gift cards as a reward for using that credit card. These cards can have a higher interest rate than credit cards that do not offer rewards.
Business credit cards are reserved for expenses related to running a business. But this type of credit card is not protected under the Credit Card Accountability, Responsibility and Disclosure Act. This means that the interest rate for this type of card can be raised at the discretion of the issuer. If you have a business credit card, you can expect to pay much higher rates than someone with a regular credit card does.
There is an interest rate that applies to the purchases made with your credit card, but then there is a different interest rate that is applicable to balance transfers and cash advances. So, two people with the same credit card that has the same interest rate could be paying different amounts of interest based on purchases or transfers.
Not all Credit Reports are the Same
Interest rates are assigned by credit card companies based on your credit history. If your history is spotless, you will undoubtedly be given a rate that is lower than someone whose credit history is not so great.
Missed payments, late payments, and going over your credit limit are tracked and recorded on your credit report. They can make you seem like a high risk to the credit issuer. The more of a risk you may be, the higher the interest rate you may be assigned.
Keep Track of Your Credit Score
It is good practice to keep abreast of what your credit score is. To request a free copy of your credit report, visit AnnualCreditReport.com. Report any discrepancies that you find immediately to the credit bureau.
The better your credit score is, the lower your interest rate could be.
Know Your Consumer Rights
As a consumer, you have rights. The laws are always changing, but currently the Federal Reserve provides a slew of information concerning credit cards. At the Federal Reserve website, it states that credit card issuers are bound by law to provide you with a 45-day written notice before they are allowed to raise your interest rate or make any other significant changes to your credit contract.
If you are 60 days late on a credit card payment, the issuer has the right to raise your interest rate. It is easier to make your payments on time in order to avoid these hikes in your rates.
If you are searching for a credit card with an affordable rate, use the FREE credit card finder today!