The Finance Blogger


Low Credit Card Rates

low credit card ratesIs there any such thing as low credit card rates? Low credit card rates do exist in various forms, however consumers must be very careful about the terms and conditions associated with these cards. The most popular is the situation were a new credit card is offered to you and you are also offered no interest or low interest on any balances transferred to this card for the first six months. Sounds pretty good doesn’t it, particularly if you are already carrying a balance on another credit card and paying 18% or more on that balance.. You get in effect a low interest loan for a short period and you save the interest you would have paid on another credit card which was probably at the usual rate of 18 to 20% interest.

This will work well for many people who are then able to repay this amount that was transferred within the specified time. If you do not, the rates revert to the regular credit card rates of 18 to 20% on the full unpaid balance. You have been able to save some interest, but then you are right back where you were a few months ago. The only way to get out of this circle is to really pay the balance back and avoid paying interest at these high rates.

Low Credit Card Rates – Interest Rates

Some credit cards with low credit card rates also come with either a monthly fee or an annual fee. This is in effect adds cost to the money borrowed and replaces the interest that you have supposedly saved.  These annual fees can be as high as $100 or even more every year. Credit cards that charge for their services usually come with other benefits as well which some consumers find very useful and valuable.

Benefits such as car rental insurance, health insurance for travel, travel insurance, insurance on items purchased are just a few of the benefits that many consumers value. One area that many people really do make use of is the points that they accumulate over time. These points can be used to buy things, pay for flights or hotels and even entire vacation excursions.

Depending on how much you use a credit card, these points can really add up and become quite valuable. Do the math and make sure that you are receiving sufficient benefits from the credit card before signing up for one with an annual fee. Make sure that you also use them as well to ensure that you actually gain this benefit.

Verify the Benefits

Before you apply for a credit card check all of the benefits and evaluate how much or how valuable these benefits are to you. Take the time to think about how and whether you will actually use them or not and then what the value is for you. Your decision will determine just how low your low interest credit card actually is.

Another factor to consider before applying for or accepting a credit card offer you have received is the impact that adding a credit card will have on your credit rating. Every time you add a new credit card, you add more potential debt since the credit rating agencies assume that you will use that credit at some point. The greater the potential debt and the greater the potential monthly payments compared to your income, the lower your credit score is going to be.

Too Many Cards, Bad Credit Rating

We have seen people with no real debt, everything is fully paid up, but they have five to ten credit cards. Their credit is in the toilet even though they do not owe a thing to any of them. They pay their credit card balance in full at the end of each month. This is a sure way to lose your credit rating.

Which will make it very difficult to find a competitive loan when you do need a car loan, a mortgage or a personal loan for whatever you are planning.  We suggest that you try to stick with two or three cards at the very most. So be careful when you accept a new credit card and understand what it will do to your credit rating!

For more information on credit card interest rates and more, click here.

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