Low Interest Credit Cards: Options Available and Worth a Look
One of the most important parameters that help distinguishing one credit card from another at the time of filling credit card applications is the APR or annual percentage rate. It is the interest levied on all outstanding balances which are not paid before the due date. A high interest rate means that you will pay a high interest on your outstanding balance, and it is not good news for those who generally have a rotating balance or card debt that stays month after month.
What is the choice?
Those who are filling credit card applications have a choice between low interest credit cards and high reward credit cards. There are cards with a low APR and good rewards like cash back and air miles, but such cards are reserved only for those with excellent credit scores in excess of 720 or thereabout. Low interest credit cards are ideal for those who leave outstanding balances every month, owing to their high flying lifestyle. On the other hand, those who are fairly confident of paying back their credit card debt on time, can go for high reward credit cards, even if the APR is slightly higher as they wouldn’t really be deeply affected by the higher interest rate.
What’s on offer?
A quick look at the available low interest credit cards shows that there is plenty of choice. There are cards from Citi, Capital One and Chase which have impressive features. For example, one of the credit cards on offer comes with 0% intro APR on both balances as well as purchases for as long as 18 months, after which the regular APR would vary between 11 – 19%. This is a great balance transfer offer although credit card applications from good credit customers only will be accepted by and large. There are some other interesting features of the card including travel and roadside assistance which proves useful for those who often travel by road and travel frequently.
There is no fraud liability for lost or stolen cards as well. There are some other low interest credit cards with APR hovering between 12 – 20% including a 0% intro APR for the first 12 months. There are thousands of bonus miles for opening an account that can be redeemed on travel expenses like air tickets and hotel stay.
Variable APR credit cards
If you are looking for low interest credit cards, it is a good idea to check for balance transfer cards that come with variable APR terms. Credit card applications from customers with excellent credit are usually considered for 0% introductory rates for as long as 18 months which allows you to save a lot of money in the form of interests paid on your outstanding balance. The features of these credit cards can be categorized as follows:
• 0% APR for a period varying between 6 – 18 months depending upon the credit score of the individual
• 0% APR could be on balance alone or both on balances as well as purchases, the latter being extra beneficial.
• Regular APR varying between 11 – 20%, once again depending upon the credit score of the individual
• Additional bonus miles for purchases and expenses above a stipulated milestone in the first 3 months.
Low interest credit cards without frills
Those who have a high outstanding balance can go for balance transfers to make sure they are not paying a very high interest on the due amount. However, there is always a choice between credit cards with 0% intro offer followed by a regular rate of 12 – 20%, and a low interest rate of around 3 – 6% from the start for a much longer time period. These low interest credit cards provide an interesting option. If you have a large outstanding balance, that you cannot seem to repay before the introductory period on the first card expires, then the second option is beneficial as you are only paying a very low interest. On the other hand, those who have a manageable outstanding balance that can be repaid within the time frame of the introductory period should go for the 0% intro APR credit cards, as they can get away without paying any interest at all. Thus, it is up to the individual to go for low interest credit cards with no frills or confusion or cards that offer exceedingly low interest, sometimes even 0% for a fixed time frame followed by a sudden spike.
Precautions for credit cards with low interest rates
Credit card companies earn a large part of their revenues from interests paid by the card holders on their outstanding balances. A lower interest credit card obviously translates to less interest paid by customers, which means a loss of revenue. Therefore, card holders have to be exceptionally careful at the time of filling credit card applications, making sure they are well aware of the fine print of the credit card. Here are some things they should take note of in a credit card with low APR.
• There could be an additional annual fee of $50 - $150 that could add to your outstanding due amount especially when you are going for a balance transfer.
• Similarly, balance transfer fee is levied on balance transfer amounts, and this could be around 3 – 5% of the outstanding amount.
• Some credit card companies drastically hike the interest rate even if the card holder misses a single bill payment. So, by missing the due date just once, you could see your APR go from 5% to 25%, which is why a thorough check of the fine print is important.
• While comparing credit cards you should check additional charges like cash withdrawal fees charged for using credit cards at ATMs, currency conversion fees for using cards in other countries and penalties for late payment or for exceeding credit limits.
Those who find it hard to repay their outstanding due amount will do well to go for credit cards with low interest rates, but a thorough inspection of the fine print and terms and conditions is equally important.