Everyone gets those offers for a low interest or 0% introductory interest credit card in the mail or email. You want the lowest interest rate so you don’t have the risk of paying as much on any balance you may carry, but don’t just go out an Google best low interest credit cards. You need to understand what a low interest credit card is what other options and fees may be involved in getting that credit card.
[Read: How to Use Credit Wisely]
First and foremost, what is low interest when talking about credit cards? On average the interest rate of credit cards is around 15% but the range can be from 3-5% up to 29-32% depending on the card and your credit rating and everything else that goes into your application approval. So when looking into low interest credit cards a great starting point is under 12%.
Why Get a Low Interest Card?
People have a variety of reasons to look into getting a low interest credit card. Some just want to save money on the interest charges if they carry a balance from month to month, some are looking for help to manage and get out of debt, some are looking at a big purchase that will take months to payoff and want to lessen the amount of total interest paid on the item. No matter what your situation is, we all could use a few tips in our search.
Where to start the search?
When looking for a low interest credit card there are many places to start. Some are better than others but here is a list to get you going:
- Websites for large or national banks
- Each brand of credit card (VISA, MasterCard, American Express) has a website
- Credit card rating sites
- Mailings sent to you at home
- If you’re really stuck… Google it and look for site names you recognize
While all of these will get you information and allow you to apply for low interest credit cards, the best place to go is your local neighborhood bank. They are more likely to know who you are and work with you to get you the best deal so they can keep your business.
Do Your Homework!
The majority of credit cards available have many other reward programs and benefits associated with them, so before you make your choice take time to look at all the options. Common benefit programs include:
- Cash back on purchases
- Travel rewards or airline miles
- Credit toward balance with certain types of purchases
Take the time to think about which programs will actually work out for you, it does no good to rack up hundreds of thousands of airline miles if you never fly anywhere. Pick the best fit for you, not the best advertising.
Fees, Fees, Fees… Which fee for which activity
Credit cards come with multiple levels for fees for services and interest rates for different activities. Some of these activities are new purchases, balance transfers from another (possibly higher interest card), cash advance, and penalties.
Balance transfers: many credit card companies offer deals on low interest rates when you transfer a balance to their card, but make sure about the details and timeframe for the low interest rate.
New purchases: many cards offer introductory rates of as low as 0%, but be aware of the longer term interest rate as typically after a year the 0% rates changes to anywhere from 5-20%.
Cash advances: these typically have the highest rates associated with them, in the long term buying on credit saves money compared to a cash advance but in an emergency when credit can’t be used it is and option.
Penalties: these can range from a recurring late fee to increase in interest rate for poor management of credit (overdraw) or missed payments. Some cards offer forgiveness programs for a first time late payment. Make sure you know the fine print before signing up for a card.
With all these variables it is important to keep track of all of them when making the decision of which low interest credit card is the best fit for you and your life.
Obtaining a low interest credit card can have many advantages and help keep finances organized. Please be smart about both of these when obtaining new credit cards. Getting a new low interest credit card to get out of debt can be a great tool as long as it doesn’t turn into another debt builder, where you use up the new credit without paying off any other debts.
The best way to manage credit card debt is to pay off the full balance each month. When that just isn’t possible a low interest rate can limit the impact of carrying the balance from month to month. Once you get to where you can pay of the balance each month you won’t have to worry about the rate charged since 5% of zero and 29% of zero are the same.