Definition of Low Interest Credit Cards
Low interest credit cards have many advantages for consumers. They provide you with a reliable way to make purchases and even if you carry a balance on your card, you won’t build up as much interest, therefore as much debt, as those with higher interest cards. That being said, there are some particulars of low interest credit cards you should know before applying.
A low interest credit card is one that has a low interest rate so the purchases you make will not rack up a high amount of finance and interest charges (usually keeping you in debt longer). These cards are typically given to those with very good credit, though the interest rate may change over time depending on your use of the card.
Two types of low interest credit cards exist. For instance, there are cards with a low fixed interest rate. These cards remain at the same interest rate unless you miss a payment or incur a penalty of some sort. You usually obtain these cards through your bank or credit union. The other kind is a low introductory interest rate card, which provides you with a very low interest rate for the first few months of being a cardholder and then that interest rate increases after the introductory period is over.
Which type of card you apply for will depend on how you plan on using your credit card. If you will carry a balance, a low fixed rate card is best, since you won’t accrue as much interest over time. However, if you plan on paying off your balance every month, the interest rate in the long-term won’t matter so much, so you can opt for a card with a low introductory rate.
Reading the fine print is of the utmost importance when it comes to credit cards. Failing to understand the terms and conditions could result in you experiencing unexpected charges and fees. In some cases, low fixed rates are not fixed indefinitely and are instead determined by the Federal Reserve’s prime rate. If the Fed decides to increase rates your fixed rate card might go up as well.
Finding a low interest credit card to apply for isn’t all that difficult. It’s important to have a good credit ratring, otherwise you won’t be approved. Your credit union or bank is often the best place to seek out a card with a low interest rate first. Compare card rates from your bank with those from other companies to find the best deal is also a good idea.