How Do Low Credit Card Rates Work?
Many credit card companies advertise low rates to attract new customers. Understanding what a low credit card rate is and how it works will help you to choose the credit card that best suits your needs.
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The Facts
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A low credit card rate means that the cardholder will pay lower interest charges on his credit card balance over time than someone with a high credit card rate.
Time Frame
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Some low credit card rates last for a limited time. Introductory rates are often very low for a certain period of time--usually six months to one year. When the introductory rate expires, however, the interest rate on the card will increase.
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Benefits
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You want low interest rates because you pay less overall for the purchases you make with your credit card. This helps prevent credit card debt from growing out of control.
Considerations
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Typically, only consumers whose high credit scores indicate that they will likely repay their debts receive low credit card rate offers. Individuals may, however, attempt to negotiate with their credit card companies for a lower interest rate at any time.
Warning
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Your credit card company can revoke your low interest rate if you go over the spending limit on your card or make a late payment. Because credit card companies monitor their customers' credit reports, making a late payment to any other creditor can also cost you your low interest rate.
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- Photo Credit Image by Flickr.com, courtesy of Andres Rueda
