Print Article for : Low Interest Credit Cards Visa

Your Online Guide » Credit Cards » Credit Card Interest Rates

[L650]Low Interest Credit Cards Visa

by Mark Williams, Mar

For those with excellent credit it is indeed possible to obtain a card with a comparatively low interest rate. Rates as low as 5% are still possible, though likely not for long. (9%-15% is more common, which is still good for credit card debt.)

For those with less than stellar credit, a low interest rate offer is more likely going to be one with hidden clauses.

Look for caps on amounts charged or transferred. Some offers allow the low rate only on transferred amounts. Other contracts specify limited periods. (6-12 months is common, 15 months is possible.) After that time, the low interest rate automatically switches to the normal APR on any remaining balance.

What is an APR? And what constitutes 'excellent' credit?

APR is an acronym for Annual Percentage Rate. Suppose you charge $100 and the APR is 12%. Does that mean you pay $12 in interest for the year? Probably not. The APR is divided up into a monthly rate, 1% per month, and applied EACH month to ANY outstanding balance.

How good your credit is depends heavily on your FICO score. (FICO is a number calculated by a secret algorithm that takes into account total outstanding debt, number and length of late payments, and other factors.) That number, along with an analysis of your credit report, containing age, length of credit history, kinds of debt, etc, determines how the card issuers view your credit worthiness.

For those who pass the 'good credit' filter, there are multiple criteria to consider.

Do you pay off your entire balance due when the bill arrives? If so, the APR is irrelevant since companies almost always forego applying any interest at all. (Note: They're not required to. Technically, interest charges begin from the date of purchase, not when the statement is created.)

Do you use the card to make large amount purchases, or accumulate large balances in one month? If not, the difference between a low interest rate and the normal APR is usually insignificant.

Most low interest cards have 'fine print' limitations. These include limited time periods, after which the APR increases, caps on credit amount, etc. One low interest card type, the 'balance transfer', often limits the rate to the amount transferred. Interest on any new charges are calculated at the normal rate.

Also, keep in mind that cards actually have more than one APR. One rate applies to normal purchases, another to cash advances, etc. Read the contract carefully.

For those tempted to accept the low or zero interest offer, intending later to switch to another when the offer expires, a word of caution. Switching cards frequently can harm your FICO.

Every time you apply, a credit report is created and analyzed. Your FICO is partly dependent on the number of those credit checks performed. Also, your score is influenced by the length you have held a particular card. Many cards acquired in a short period is a red flag.

For those with genuinely good credit (680 or higher, in conjunction with other factors) a low interest card is a deserved reward for responsible behavior. Most are free of annual charges. And, if you maintain a monthly balance on a substantial amount, these cards can save you a significant sum.

Low interest credit cards are essential tools for the frequent credit card user. Because many people cannot pay off their credit cards entirely when the bill arrives each month, enrolling in a low interest rate credit card program can help you keep your interest rate fees to a minimum. There are a variety of highly feasibly strategies available for shoppers that are in the market for low interest credit cards.

Background

Before you begin shopping for the best available low interest credit card, it is important to understand how rates are set. You probably know that all people wishing to obtain any sort of credit in the U.S. must go through a "credit check." A credit check is essentially a survey of your past credit transactions that will help to determine the degree of liability that a credit card company may have to assume if you are going to be a client. Because there are so many credit card users representing a variety of backgrounds, individuals are assigned a unique "credit score." In general, the higher your score is, the better chance you have of obtaining a low interest credit card.

Balance Transfer

While no credit card company can readily offer an interest-free card (at least for the long-term), you may be able to frequently transfer your credit card balance to a company that offers so-called "cheap credit cards." Cheap credit cards are, essentially, credit cards that offer a limited-time-only promotion whereby individuals that enroll to receive a special low interest credit card will benefit from a 0% interest for a pre-determined amount of time. Buyers: beware. Often, when a company offers a 0% introductory rate, they make up for the generosity by drastically increasing the rate once the trial period has expired. For this reason, many individuals that use these cheap credit cards frequently migrate their balances from one low interest credit card provider to the next.

Be a Long-term Client

While migrating your balance from one company offering cheap credit cards to the next may seem like a strategic move, the frequent moving actually has a negative long-term effect on your credit score. Each time you open and close a credit card account, your credit score is threatened. The more you open and close the less stable you will appear. Therefore, your credit score will necessarily be lowered. However, there is hope for long-term clients wishing to obtain a low interest credit card. No matter how low or high your interest rate is when you initially enroll in a program, if you can establish a strong history with a credit card company, you will be in a good position to negotiate a low interest rate.

Shop Around

It may seem intuitive, but many credit card users neglect to shop around for the best rates. Instead, they sign up with whichever low interest credit card company that offers an appealing rate on the direct mail campaign. However, with a little research, you will likely find that there is a huge disparity between the rates that various credit card companies are prepared to offer. Also, if you are a member of any professional organization, you may qualify for an additional discount on the interest rate. Do your research; you will find that education will be your finest asset when selecting a low interest rate credit card.

Everyone wants to shop using a low interest credit card. No matter how affluent you are, many people bulk at the idea of paying high interest rates month after month. Regardless of your existing credit score, if you combine strategy and research, you can certainly find a slew of low interest credit cards that will make your purchasing experience much more pleasurable. Remember: cheap credit cards not only soothe any shopper's conscious, but they allow shoppers to retain some extra cash that they can put towards more important purchases.

Article Source : Pg. 3

About Author

Both Mark Williams & Robert Alan are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Mark Williams has sinced written about articles on various topics from Home Based Business, Shopping and Family. Did you like this article about ? Mark Williams offers other great tips and advice about. Mark Williams's top article generates over 90500 views. to your Favourites.

Robert Alan has sinced written about articles on various topics from Credit Cards, Business Credit Cards and Credit Cards. For more on , Robert Alan recommends that you visit CreditCardAssist.com. Robert Alan's top article generates over 110000 views. to your Favourites.