Most experts keep warning you about credit cards and the risks, the danger of getting into insurmountable debts and the likelihood of paying thousands of dollars in terms of fees and interest. This is certainly not the whole truth. You could avert all risks provided you are using your credit cards well and are serious about the way you use your credit. On one hand, you could make incredible mistakes, get into major debts, and finally ruin your credit. On the other hand, you could use your credit card judiciously and with great responsibility. You could learn all the rules about using your credit card to your advantage, save, as well as, earn money. You would never get into the debt trap provided you follow two fundamental rules: charge whatever you could actually afford and go on paying your balance diligently every month.
The rule of thumb is to only borrow as much as you can afford to return. Staying within your means reflects well on your credit score and is an indicator of responsibility that is regarded favorably by future creditors. Getting credit would be a lot easier then. On the other hand, maxing out credit cards or going to the brink of the same is extremely irresponsible and will be regarded as a sign of unreliability by lenders in the future. Lenders may also say you qualify for significant amounts of loan money, but you should only take up as much debt as you can repay. Figure out a monthly repayment amount that is comfortable for you and keep some breathing room.
A low-interest credit card is supposed to be a wonderful tool for saving a considerable amount of money on interest payments. Some credit cards, for instance, could be offering low rates such as 8.99% & 11.9%. The actual difference in the interest rates could be amounting to a substantial amount in terms of interest savings. In this context, you must understand that credit cards offering low-interest rates prove to be of great help to consumers for boosting their purchasing power while simultaneously saving money.
What Is a Low-interest Credit Card?
A low-interest credit card would be offering a definitely low-interest rate over a long duration of time. In this context, you must know that the APR on this sort of a low-interest credit card could be as less as 6.4 percent. Mostly, when credit cards typically offer zero percent or a low-interest rate, this offer would be applicable for only a fixed promotional period. Once the promotional period is over, the interest rate would leap back to the usual or the standard rate. But with a low-interest credit card, the interest rate is generally fixed for the entire lifetime of such a card.
What Are the Advantages of a Low-interest Credit Card?
Low-interest credit cards promise a broad spectrum of benefits. Explore the main advantages below.
Huge Savings on Interest Payments
Now you could save money on interest expenses. If you are planning to carry a balance on the credit card then it is vital to take note of the exact associated interest rate of the credit card. The higher the interest rate, you would end up paying more when you use the credit card for your varied purchases. The greatest benefit of a low-interest credit card is actually the fact that you would be saving a substantial amount of money on your monthly interest payments.
If you have a tendency to go on carrying your credit card balance, you must seriously think in terms of a low-interest credit card. Several credit cards are known to offer a high-interest rate of around say 30%. When you compare this sort of a credit card to the one offering only 15% rate of interest, you would find that your monthly interest repayments could be reduced automatically to half. This could certainly culminate in massive savings and this seems to be one of the greatest benefits of opting for a low-interest rate credit card.
You may also end up saving some money if you start using your credit card for chiefly balance transfers. In this context, you must understand that a balance transfer would imply that you would be using your lower interest credit card for paying off your other higher interest credit cards. This could save you a massive amount of money depending precisely on the actual rate of interest on the card you would be paying off.
Pay Off Your Debt More Quickly
Credit cards with lower interest rates allow you to pay off your debt much quicker and more easily. You can use credit cards for balance transfers, so you could shift the balances from your high-rate cards to the low-rated ones, thus facilitating easier repayment. It will also let you meet your monthly payments without any hassle, which, in turn, is reflected in your credit score. This sounds great, but there are a few things to keep in mind:
The introductory period: A lot of credit card programs offer a 0% APR for a short term as an introductory offer. This means you don’t accrue interest on any purchases or balance transfers on that card. This is helpful when you want to make big purchases without being hindered by interest rates.
Low ongoing APR: People who don’t get to meet their full monthly payment for the credit card should seek out cards with a low ongoing APR as they will dramatically reduce the interest paid in the long term.
Lower Minimum Payment
Credit cards offering low-interest would not only save a substantial amount of money over a long period of time, they could help in freeing up a reasonable amount of cash every month. That is simply because of the fact that lower interest would be resulting in relatively lower monthly payments. Minimum monthly payments are actually a precise percentage of exactly what you owe. The less you are owing in terms of interest every month, the less you would be owing for credit card overall. This would definitely imply that you would be having more savings each month for paying the rest of your bills.
Use your low-interest rate credit cards with great responsibility. Remember credit score usually deals with whether you pay on time and how much money you have due on your loans and cards, so your payment amounts don’t reflect directly in the score. That said, if you pay your entire balance every month, you will be able to manage debt effectively and never carry around too much of it. Be regular, be diligent, and in time you will see your debts have been mitigated and your credit score looking good too.