Low interest credit cards are one of the more popular types of cards because you can save a significant amount of money in both the short and long term. Most companies offer a low interest credit card in addition to their other more advanced cards. These cards are also valuable tools to help rebuild a bad credit score, which helps you get loans and other financial aid. You can also use them to leverage a larger credit card debt, which is also helpful to repair a bad credit score. Consider the cost and benefits of the low interest credit cards offered, and be sure to compare your options before making a choice.
Specifics Of Low Interest Credit Cards
Depending on the individual, credit cards can be a boon or a drawback. For instance, if you carry a monthly balance consistently then a low interest credit card would be good for you. This can lead to some bad habits if you aren’t careful, however, and can affect your credit score. Maintaining a credit card balance that is less than 30% of your approved line of credit can actually help increase your FICO score and open up more financial opportunities. Obviously, if you are purposely maintaining a balance for this purpose, it will be best to do with the lowest interest rate possible.
By definition low interest credit cards carry a smaller rate of required compensation if you go past the grace period that most cards offer. For example, if you spend $1000 on a card with a 10% interest rate (for speculation, some low interest cards may have even lower rates) and don’t repay within the grace period, you’d have to pay $1100. In addition to a monthly interest rate, you also have to keep an eye on the annual percentage rate (APR) to ensure that it isn’t exceedingly high, because you will also have to pay a bit per a certain amount of time depending upon how much you’ve spent with your card. It’s much like a charge for using the credit service.
Types Of Low Interest Credit Cards
Low interest credit cards can come in a few varieties. Fixed rate credit cards have a low to no interest rate for a set amount of time, usually six months to twelve months. After this period your interest will become normal. Your bank must notify you before their interest rates change when you are using a fixed rate credit card during the fixed rate period. These cards can also be effectively used to manage an existing credit card debt by transferring a high interest balance to a low to no interest card. Be aware that there will most likely be a transfer fee involved.
Cards specifically designed for putting an existing debt onto are called balance transfer cards. They carry very low interest rates as well. You can use balance transfer cards and other low interest cards for normal purchases, but before your payments affect any previous balance they affect more recent purchases. It’s extremely important to moderate your card usage, lest you find yourself in debt with this new card too.
Tips And Reminders For Low Interest Credit Cards
With any credit card it’s relatively easy to lose sight of what you’re spending because, initially, it’s not coming out of your pocket. You must remember that you do have to pay for your purchases eventually. Low interest cards can help somewhat if you accidentally spend more than you’d be able to pay back normally simply because of the way they work. Going over your credit limit is extremely bad, and you should never let it happen because it can end up in your interest rate rising dramatically or your card being revoked.
Interest rates can be changed occasionally due to economic fluctuations, and it’s important to keep your eyes on that. Your bank can change your interest rate based on how well you use your card; if you’re slacking on paying properly they may raise it, or if you’re keeping up efficiently your interest rate may lower. With a low interest card your bank is required to notify you, as stated above.
When applying for a credit card of any type it is important to think about what you’re going to use it for, and whether or not you can keep up with the payments. It’s also very important to keep a handle on your spending, and many card internet sites have tools to monitor purchases. The key to using credit cards is simply being careful, and aware of your spending. Lots of people don’t realize how much they use their card until they come home to a large bill and wonder how it got there. Applying for any credit card affects your credit score, and usage and maintenance affect your score still more. It’s important to not inadvertently shut yourself out of loan opportunities that you may need to get a new house or car.
How To Compare Credit Cards With Low Interest Rates
Low interest cards are a valuable tool to get you out of credit card debt or to help improve and build a credit score. Remember to watch your spending and not to get complacent with your card. Keeping up with your card payments is very important as well. Comparing low interest credit cards can be easy by using our free credit card chaser. Chase down the credit cards with the lowest interest rates now!
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- What are some fixed rate credit cards?