This can be a good deal for many people who have existing credit card balances providing that you can pay this new card in full at the end of six months. Any unpaid balance is going to have interest charges levied at the full rate charged by that particular credit card. Unfortunately many people do not repay the balance for one reason or another and they are faced with the same high payments again.
These credit card companies will even provide you with checks that you can fill in and send to the other credit card company to pay off this balance. They make it really easy to take out new credit and to also transfer money as well. Just write a check and send it off and you are done. The clock begins ticking as soon as the money is transferred out of your new credit cards account and you will want to keep track of this date so that you avoid paying any unnecessary interest charges.
Interest rates on credit cards can be very low as incentives to persuade customers to transfer their balances. They are attractive and there is no effort. You do not even have to fill in an application in many cases or meet with a loan manager. Personal loans on the other hand will require an application to be filled in. Also a meeting with a lender in many cases. There will be more paperwork to sign before you can be approved for a personal loan. Most people will take the easy approach. They will use the credit card. Even if they can save some money in terms of interest charges in the long run.
The key piece of information that should be considered is how long you will need to borrow the money. Both are loans and both have different terms to be compared. Personal loans will have a fixed term with a fixed interest rate for the term. Credit cards with a low interest rate initially will increase after the initial offer. They will vary depending on the balance each month. This can be a complicated mathematical calculation compared to the personal loan. But rest assured that the personal loan with a lower interest rate is going to cost you less if you need the money for longer than a year’s time.
Some credit cards that have low interest rates also have other features that can be very valuable to many consumers. Travel insurance, car insurance, health insurance and purchase insurance are some of the benefits. In addition gathering points that can be used to pay for various gifts, hotels and air travel are huge value to many consumers. This incentive alone will cause customers to charge as much as they can to their credit cards.
Still, we all have to be able to pay the balance at the end of the month to avoid triggering interest charges that can be as high as 18%. The low interest credit card is usually only applied to amounts that are transferred. Anything else that is charged to the card and not paid at the end of the month will be charged at the regular interest rate of 18%.
There is absolutely nothing wrong with selecting a low interest rate credit card. Like all products of this type, it is important to manage them properly. Only borrow what you can afford to repay on time triggering the least amount of interest.
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I got caught with a high interest credit card and it cost me a lot of money, now I know better , this post helped a lot