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Everyday you probably receive at least two or three credit card offers in the mail. Oddly they all seem to advertise the same thing, low interest credit cards. With the variety of low interest cards being offered to consumers, there is no reason to accept anything less. First it is important to understand just what qualifies a credit card to be considered low-interest. Then you need to know how to apply for and be approved for a low interest credit card. Finally you should know how to keep that interest rate low as long as you keep the card.
What Is A Low Interest Credit Card
The definition of low interest changes from time to time. A couple of years ago, anything under 9 percent was considered low while now it is closer to 12 percent and under. A true low interest card remains low. Do not be fooled by introductory rates which go up after a certain number of months. Also do not be tricked into opening a low interest account that carries an annual fee with it, there are too many out there that don't. When shopping for a low interest card, there is no need to settle for anything less than everything you want.
Apply For A Low Interest Card In order to qualify for low interest credit cards you will need a pretty good, if not excellent, credit score. If your score is below 680 you probably will not be approved and shouldn't risk damaging your score more by applying. Take measures to raise your credit score before applying for the credit card in order to improve your chances for acceptance.
Approved For A Low Interest Card Great! You've been approved and sent a card in the mail. Activate your account but don't rush out and buy anything. In fact it is better to not charge anything that you cannot pay off within the month. This way your credit score will go up and you'll always have a low interest credit card in case of a major emergency.
Keeping Your Low Interest Low Credit card companies watch closely that your payments come in on time. If you take the earlier advice, you won't have to worry because you won't have any charges to pay off. However if you are like everyone else, you probably have a balance that you carry over from month to month. Pay on time, at least the minimum, or you will run the very real possibility of your interest rate going up.
Eighty one percent of regular American households own at least a single credit card, making credit card ownership extremely popular nowadays. This high percentage rate is attributed to the convenience and benefits of using credit cards for purchases instead of using cold hard cash. There are also other additional features of credit cards (such as reward system and applicable discounts) that helps an individual generate savings out of what he/she spends using that card.
However, many financial experts stressed out that these facts are not just within the positive aspects alone. In fact, most of the credit card holders who belong in that 81 percent possess more than $8,000 worth of credit card debts. The accumulation of such huge credit card debts is attributed to several factors such as the consumer's lavish lifestyle and unnecessary spending.
But one of the most common "suspects" in accumulating huge credit card debts is the interest rate.
According to a certain consumer credit website, a single credit card has an average interest rate of 18.9 percent, or relatively close to 20 percent worth of interest rate payments. With this high interest rate (this is just only the average) it will really lead the credit card owner to huge debts, especially if he/she has a lavish lifestyle.
Let us get deeper into the nature of interest rates. These rates are typically charged by the credit card company once the owner had accrued several balances on his/her due payments. In most cases, individuals tend to pay the required minimum credit card balance only, as shown by the 48 percent of the total 81 percent of credit card owners.
If you are only paying the minimum balance of your credit card, the tendency is the remaining balance (or the accumulated excess of the minimum balance) will just be carried over the next monthly billing period, which will worsen the situation. The remaining balance will pile itself, resulting to higher accrued debt, which is commonly hard to pay since the same interest rate will be applied on that higher accrued debt.
At this point, you need to apply for a low interest credit card. You will be provided with low introductory APR (annual percentage rate) which will lower your monthly interest rate payments. However, most financial experts argued that low interest credit card just motivates individuals to make more purchases. Since the interest payments are now easy to handle, you will think that it is okay to make many purchases.
Hence, before you apply for low interest credit card, you need to consider several things that you can use to evaluate and interpret several facts about low interest rates applied on these credit cards.
1.Most of low interest credit cards are offered as an introductory promo, making it an effective strategy in attracting more clients. Most individuals are accumulating larger credit card debts because they fail to understand that this introductory promo is limited within a certain period of time.
2.The effect of neglecting the fine print of credit cards is the worse thing that you can experience. In fact, almost 75 percent of credit card owners who accrued huge debts were not able to understand the things written on the fine print of their credit cards. Most of them confessed that they have just signed up immediately without reading the fine print.
Before you apply for any low interest credit card, make sure that you analyze it first or else, you will be counted among the majority of the 81 percent of credit card owners who have more than $8,000 worth of credit card debts.