When it comes to credit cards, everyone wants to find the lowest interest rate possible. The higher the interest rate, the more expensive your credit is going to be. High interest rates can make your debt grow by leaps and bounds; However, low interest rate credit cards allow you to have the credit you need without having to worry about going even deeper in debt. If possible, getting a credit card with a low interest rate is a great idea. However, before you go with a low interest card, here are a few things you need to know and understand.
- Great for Balance Transfers – First of all, it is important that you know that low interest rate credit cards are excellent for balance transfers. If you have a large balance on a card that has a high interest rate, you may want to consider transferring that balance to a card that has a lower interest rate. Even if the low interest rate only lasts for six months, that gives you six months at a lower rate to pay off that balance. With a lower rate you should be able to pay off what you owe in credit card debt even faster.
- Not for Those with Bad Credit – While credit cards with lower interest are great, unfortunately they are not for those with bad credit. If you have bad credit, more than likely you will not be approved for a card with low interest. Usually only those who have excellent credit scores and histories will be able to get a card that boasts a low interest rate. So, if you have very bad credit, you probably should not even waste the time applying.
- Great Savings – Having a credit card that has a low interest rate can save you huge amounts of money. Just think about how much money goes down the drain every year because of interest rates. When you have a lower rate you save money and more of what you are paying on the credit card will go to actually paying off the principal balance.
- Beware of Rising Rates – Although many lower interest rate credit cards look great at first glance, you do need to beware of rising rates. There are many low interest cards that will go up after a few months. You may only be able to get that low rate for 6-12 months and then the rates may go up by more than 10%. Also, if you every miss a payment or even if you are only a couple days late, in some cases you may lose your low interest rate and the rate of the card may go up to more than 20%, which will definitely cost you. Be sure to read the fine print and find out if the rates may rise at any time so you will be prepared.