Low-cost credit cards, as the name implies, are credit cards that come with either a low fixed annual percentage rate (APR) or a very low introductory APR. These cards may or may not offer additional benefits such as travel insurance or cash back, and they can potentially be used in conjunction with other cards that provide such features. Many banks and large organizations offer low-interest credit cards, providing individuals with a wide range of options to choose from.
Securing a Low Interest Credit Card Although the challenging economic conditions and credit crisis have made it more difficult for creditors to extend credit to consumers, there are still opportunities to enjoy great credit card deals, including low-interest options. However, finding these low-interest credit cards and securing one for yourself can be a task.
Types of Low Interest Credit Cards:
- Credit cards with low-interest introductory periods: Many creditors still offer attractive introductory rates. However, it's important to note that these low-interest introductory rates are often short-term, typically lasting only three to six months. After the introductory period ends, it's crucial to pay attention to the interest rate of the credit card, as it may become quite high.
- Credit cards with fixed low-interest rates: Opting for credit cards with fixed low-interest rates is often a wise decision. Unlike cards with variable rates tied to the prime index, fixed-rate cards provide stability. This means you won't be caught off guard by sudden increases in interest rates.
- Credit cards with variable low-interest rates: These cards have interest rates that fluctuate based on the prime index. While they may offer lower rates at times, there is a risk of the rates rising, making them less predictable compared to fixed-rate cards.
Working Toward a Low Interest Credit Card
A credit-worthy credit card customer is one with a good credit history and a strong credit report.
If you are looking for the best credit cards around – i.e. cards with a low interest rate – then you need to have a strong credit score to qualify.
The lower the risk a consumer presents, the lower the interest rate will be.
Customers with low interest credit cards are generally consistent and dependable when it comes to paying debt, and they also show a low debt-to-income ratio.
If you have a high debt-to-income ratio, it could indicate the potential of having too much debt that may, at some time, become unmanageable.
Qualifying for a Low Interest Credit Card
To be eligible for a low-interest credit card, you need to demonstrate creditworthiness. Creditworthy individuals typically have a good credit history, a strong credit report, and a low debt-to-income ratio. Lenders view them as low-risk borrowers, resulting in lower interest rates. Conversely, individuals with a high debt-to-income ratio may indicate potential financial strain and may not qualify for the best interest rates.
Transferring Balances to a Low Interest Credit Card
In addition to making purchases, low-interest credit cards often provide attractive balance transfer offers. This feature allows you to transfer higher interest debt from other cards or loans to the low-interest credit card. By consolidating your debts onto one card, you can manage your finances more efficiently and take advantage of the lower interest rate.
Always be aware of your credit card’s interest rate, and understand that failing to make even one payment on time can drastically increase your credit card’s interest rate.
Maintaining a Low Interest Rate
It's crucial to always be aware of your credit card's interest rate and make payments on time. Failing to make even a single payment on time can significantly increase the interest rate on your credit card. So, it's important to stay diligent in managing your credit card payments to keep the interest rate low.
