Doing a comparison of credit card rates can help you save money. Credit cards are almost essential these days, but if you don’t find the right credit card for your lifestyle, it may result in a lot of debt. Using a credit card takes responsibility and part of that responsibility is researching different credit cards.
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There are a number of things you should compare among credit cards. Some things include annual fees, other fees, benefits, if there are rewards, and the interest rates. Keep in mind that although certain rates may be advertised, there are things that can change that rate, such as your credit score.
Types of Credit Card Rates
When you use a credit card, you are basically borrowing money from the card issuer. Just like any loan from a financial institution, you are charged interest on this loan. Credit card issuers charge interest rates, also known as annual percentage rates or APRs, for a few different things.
You are charged an interest rate for the purchases that you make with the card. Most credit card terms will allow for a grace period. This means that you have a certain number of days to pay off the purchase balance before the interest starts accruing.
If you do not pay it off, interest will start building up on the remaining balance.
Credit card companies also charge interest on balances that you transfer from another card. This interest does not usually have a grace period and starts on the transaction date. You are also charged interest with no grace period when you use your card for cash advances.
Interest Rate Determinants
A credit card may advertise a particular interest rate, but your actual rate is not determined until after your application is approved. There are a number of things that determine what your interest rate will be.
When you first apply for a card, your interest rate is based mainly on your credit score. The lowest APRs are granted to individuals with great to excellent credit. If you do not have a very good credit score there is a chance that you will be denied for a credit card.
If you happen to be accepted for a card but have a low credit score there is a good chance that your interest rate will be much higher. There are a number of ways that you can increase your score and in due course get a lower rate. For tips, visit SmartMoney.
Once you have your card, your interest rate can increase for a number of reasons. If you have a card with a variable rate, your rate will change with the index that the card is affiliated with. If you are late with any payments, the credit card company can increase your rates.
According to the Federal Reserve there are some new rules regarding interest rates to help protect you. These include giving you written notice of any changes, applying the increased rates to new charges only, and the inability to increase rates for the first year.
Best Credit Card Rates
There are a couple ways to research and compare rates. You can do an online search like through this site and you can compare multiple cards and what rates they offer.
One way to get a low rate on a credit card is to search for a card that offers an introductory rate. There are a number of cards available that offer a 0% APR for a specified period. This can be for six months and even for a period of 18 months. Be aware that with most of these cards, once the promotional rate is over the go-to rate is usually quite high. It is best to pay off the majority of the balance before this occurs.
Another place you can find credit cards with lower rates is at a credit union. One of the benefits credit unions offer to their members is the opportunity to take advantage of credit cards and other loans with lower interest rates.
Even if you are not currently a credit union member, they have become increasingly easier to join. For more information about credit unions and to find one near you, visit MyCreditUnion.gov. If you have a lower credit score, your credit union may also have other options available to help you.
You can conveniently look for credit cards right now just by using the FREE card finder tool!