When it comes to credit it is important to keep a good credit rating. Part of maintaining this is to have some lines of credit open and pay them every month, on time and at least per the minimum required. A credit card is the ideal way to accomplish this for two reasons. First, even with less than stellar credit most people can manage to qualify for one and second credit cards are very useful for paying for products and services that are needed. A credit card payment is made up of your principal balance which is what you purchased plus interest which is the amount you are charged on any balance you carry on the card. So, of course it makes sense to have low interest credit cards. However, getting and keeping low interest credit cards may not be as easy as it seems at first glance.
Advantages
Most financial experts will advise you not to charge more on your credit card than you can afford to pay off every month. This way you will not carry a balance and the amount of your interest rate will matter very little. However, it’s pretty rare people do this and even if you do there may be an emergency situation where you need to use the card and cannot pay off the balance immediately. This is where low interest credit cards can really save you. If you cannot pay off your credit card in its entirety each month the goal is to pay off as much as possible to whittle away at your balance as much as possible.
When you have low interest credit cards this is easier to do because the bulk of your payment is going toward the principal balance as opposed to interest charges. Conversely, if you have credit cards with high interest it will take longer to pay off using the same payment each month because more money is going toward interest first. With low interest cards you can often afford to pay more than the minimum amount due.
Types
There are actually several types of cards that can be categorized as low interest credit cards. First, there are the credit cards you can obtain based on your good credit. Because of a stellar credit score, the interest rate assessed to you will be less than someone with a lower score. This is because you are a much lower risk for non payment. In order to find low interest cards, shop around at your financial institution and the major credit outlets to get the best possible offer. Then, there are those that offer low interest credit cards as a promotion. Typically these credit cards are a good deal but try to entice you into transferring your balance or signing up with them as a new customer. Within this category are even no interest credit cards where all your payment is going directly to your principal balance. This is a great way to reduce your overall debt if you have a chance to get one of these cards.
How to Obtain Low Interest Credit Cards
If you are looking to reduce the interest on your credit cards and move to low interest credit cards there are a few ways to go about it. First, contact your existing cards to try to renegotiate your interest. Credit cards are highly competitive and if you have a sound payment history, many credit card companies would rather reduce your interest rate than lose your business. If you have the ability to obtain another card to transfer your balance or, even better, have another offer to do so, you are in a position of power and can often renegotiate to a low interest. They would rather drop interest rates than lose all your money.
If you do not get any satisfaction regarding your current credit cards then the next step to take to obtain low interest cards is to shop around. You will need to contact various credit companies and request their best deal. Then, you will need to apply to get it. This may be a fairly easy process if you have excellent credit but may be slightly more difficult if there are any issues with your credit score. Another way you can obtain low interest credit cards is to reply to offers that have been sent to you with introductory rates or specials. This will give you an opportunity to reduce your debt and increase your score. If done properly you may soon be in a position to better negotiate a permanent change to your interest rates.
The Dangers of Limited Time Low Interest Credit Cards
Whenever you get a new low interest credit card make sure to read the fine print – all of it. The adage of “if it seems too good ot be true, it probably is” holds true with low interest credit cards or no interest. The problem often found with these is that there is a huge spike in interest rate after the introductory period is over or if certain conditions are not met. For example, you may have a low interest rate card but the details of the agreement state they can increase it after three months. You may find you suddenly get a spike in your interest rate you weren’t expecting.
It is also easy to forget the time period. So, if you have no interest for six months and were not able to pay off your balance on the seventh month you may be surprised at just how high your interest actually is. There are often clauses in these types of special rate promotions regarding payment also. If you are even one day late in payment, the credit card company may have the right to void your agreement and enact their standard interest rate instead. Many times these offers are great, especially for a temporary solution to debt. But make sure you know the finer points before signing up.