A Guide to Low Interest Credit Cards
Credit cards offer the convenience of making purchases without carrying a lot of cash or your checkbook. But even cards without an annual fee may come with a cost if you don't pay your bill in full each month. Any balance remaining is subject to the card's annual percentage rate (APR), the fee the company charges for the money you are borrowing from it. If you carry a balance regularly, it can be wise to look for a card with a low interest rate.
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Introductory Rates
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While many credit cards tout offers of zero-percent interest, this rate only applies for a limited time period. The zero-percent offer may apply only to purchases, or it may be for purchases and balance transfers. The expiration date of the special rate for purchases may be different from the expiration date for transfers. Be sure to read the terms and conditions information supplied by the card issuer before applying for one of these offers. Introductory rates for purchases were as long as 12 months in December 2010.
Long-Term Rate
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After the introductory rate expires, your future purchases will be subject to the card's standard APR. This is typically a variable rate that may change when the prime rate or other economic indicators change. The long-term rate you are eligible for may depend in part on your credit score. One of the lowest ongoing rates available in December 2010 was 7.9 percent. Another card offered a rate of 9.25 percent. If you use your credit card to get cash from an ATM machine, expect to pay a higher APR on that transaction.
Fees
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When examining low-interest credit cards, be sure to compare the fees charged by card issuers. Many low-interest cards come without an annual fee, but you may be charged for any balance transfers you make or cash advances you get. If you plan to travel abroad, note the cards' foreign-transaction fees.
Rewards and Benefits
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Choosing a low-interest credit card doesn't mean you have to forego the rewards and benefits offered by card issuers. Some cards offer free travel insurance when you use their credit card to buy an airline ticket, as well as an extension of product warranties on items you purchase. Others offer a money-back bonus based on the amount of purchases you make. You earn points you can redeem for merchandise, discounts or gift cards with some low-interest credit cards. You might also earn miles you can redeem for airline tickets, hotel rooms or car rentals.
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References
- Photo Credit Gold credit card image by patrimonio designs from Fotolia.com
