These days many of us carry a balance on our credit cards, which while we know isn’t an ideal situation, has become a necessity. There is a solution to make this necessity a little less painful however, and that’s obtaining a low interest credit card. Low interest credit cards are a great way to save money when things are tighter than you want them to be. Here are a few things to keep in mind when looking for the credit card that is right for you.
You Save Money On Lower Interest Payments
The biggest advantage of lower interest credit cards is right in the name. Most credit cards charge a higher interest fee, some of which can go as high as 30%. If you are keeping a balance on that credit card month over month, that 30% can really add up. Typically low interest cards have rates somewhere between 10% to 15%, which cuts your monthly interest payments in half. This can lead to big savings that you can use to pay off the balance quicker.
Lower Annual Fees
You can also typically expect lower interest credit cards to have lower annual fees. While many rewards credit cards charge in the neighbourhood of $120 to $150 a year, lower interest cards are usually between $0 and $30. While it may not sound like a big difference, the savings can really add up.
Pay Off Your Current Credit Card Debt
While paying off one credit card debt with another credit card is not typically recommended, transferring debt from a high interest rate credit card to a lower interest one is. In fact it’s the best option for paying off accumulated credit card debt outside of getting a consolidation loan. Many lower interest credit cards offer an even lower interest rate for an introductory period to help you catch up quicker as well. Keep in mind however that you should use the promotional period to pay down your debt instead of adding to it.
Things To Keep In Mind
Transferring the balance of other credit cards to a low interest credit card is only a temporary fix. You will only get the lower rate for a few months, before the rate climbs back up. Most low interest credit cards also charge a fee for each balance that is transferred over. Also make sure you don’t fall into the low interest trap, meaning you feel like you can spend more because you are paying less in interest. You should always pay as much of your debt each month as you can. Low interest cards are meant to help you catch up, and not to dig yourself deeper.
Speaking of digging yourself deeper, avoid the temptation of get a cash advance on your low interest credit card. Most cards charge an added fee and have higher interest rates for cash advances. The last thing to keep in mind is that these cards typically don’t provide an extensive amount of benefits either. This includes things such as rental car or trip insurance. There are usually no rewards such as free vacations or discount offers either. This is due to not only the lower interest rates, but the annual fee as well.
Like most things, before settling on any specific low interest credit card, shop around and read the fine print. Make sure the credit card is the right one for you, and gives you exactly what you are looking for. View