Low Interest Credit Card
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Credit card hunt is ruled by a single thing – the interest. Possessing a low interest credit card is like a dream come true for most of us. You don’t need to be paranoid however to investigate deeper and see if the low interest rate you are offered is really low.
Interest rate is in general terms the interest on your balance for one year expressed in percents. However a single low interest credit card might have multiple interest rates. An interest rate applied to your purchases, an interest rate applied to your balance, yet another interest ate for transferred balance, etc. It might be that the card issuing company advertises the lowest rate to get you on the hook. How the interest rates are applied and what are their levels – the information that really matters is scattered among the smallest print on your application. So watch out for multiple interest rate cards or judge carefully if it really suits your conditions.
Some credit card companies apply different APR according to your outstanding balance. Sad but true, the bigger your balance gets, the bigger your interest rate will be. Low interest card might turn out to be just like this and if you pile a huge balance you can quickly pile a huge debt.
Low interest credit card can quickly become the “hated” credit card if you are late with a payment. Miss just one payment and the bank will penalize you increasing your APR. Of course you can refuse the new interest rate but than your contract will be terminated.
Annual interest rate as low as zero sounds fantastic, doesn’t’ it? But make sure you are aware of the interest rate after the initial period expires. It might be that you’ve got a low interest credit card but it is more likely that you’re not.
One more possible danger is a low variable interest rate credit card, so always seek and read carefully this information when you are filling a card application form. A variable interest rate means that the interest rate is inconstant. It will fluctuate as it’s bound to another economic indicator (for example the prime rate). The bank has the right to increase a variable interest rate every now and than without any notice. If you don’t pay attention to your bank statements, one day you will wake up with a credit card that’s defiantly not the low interest card you’ve once applied for. An alternative to the variable interest rate card is the fixed interest rate card. Fixed interest rates also change however this is not a regular fluctuation and the bank will inform you at least 15 days before the increase.
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