What is the first thing you look at when you receive a new offer for credit? For most people, the answer to this question is that they look at the maximum limit they can spend. In fact, what is more important, and should be the first thing you look at with any new offer of credit, is the interest rate. Credit or interest rates are decided by the lender and can vary by such a huge amount from lender to lender, that they can make a huge difference to your financial security and well being.



For instance, if you are offered an interest rate that is significantly higher than the levels you are currently enjoying, the advice is to refuse such offers as you are already getting better rates from other lenders. Of course if you are desperate for increased credit limits and are unable to get more on your current credit rate with your existing credit provider, then the increased rate may still be attractive to you, but if this is not the case, as it is not for many customers, then you should refuse the offer.

While the credit rate expressed in the APR or annual percentage rate, is generally considered to be the cost of the credit, there are other terms of the agreement that will affect the true cost of the credit. For example, if one credit provider seems to be offering you a lower rate, but requires the loan to be secured over your home or other property, this is an added cost you should factor into your considerations. Also, if the lender provides you with a very short interest free period in which to pay your bills, this is not as low an interest rate as it appears.

Another thing that you should be looking at when considering credit rates, is the various charges, penalties and fines that the credit provider may charge to your account in certain conditions. For example, a low credit rate may not be quite so low if there is a monthly or annual fee for the card. Likewise, if you are going to be subject to drastic fines and penalties for late payments, the offer may not be as attractive as it at first appeared. Some credit rates are only introductory and only last for a few months before jumping to a higher rate, others will only apply so long as you keep your payments on time and if you fail to do this will jump to a higher rate.