Low Interest Rate Credit Cards: Start Saving Today

admin — Wed, 05 May 2010 00:03:50 +0000

If you carry an outstanding balance on your credit card, youre not alone. Nearly 70% of Americans keep a balance on one of their credit cards from month to month. And many of these cards have sky-high rates, which add up to hefty amounts in interest expense. By switching to a low interest rate credit card, you can save hundreds of dollars in interest. Starting with great introductory offers, low interest rate credit cards help you get back on track while enjoying the benefits of a credit card.

Introductory Offers

Credit companies continually offer customers incentives to sign up for their cards. This often includes an initial 0% interest rate. Many low interest rate credit cards carry this 0% APR feature. It allows you to begin saving even before the low interest rate kicks in.

The interest-free time is yours to take advantage of. You can make purchases and pay for them over a period of a few months, with no additional cost. If you carry an outstanding balance on a different credit card, you can transfer it to your new one. Then pay off the debt during the 0% APR time period. Before you do so, though, be sure to check that the charge for a balance transfer is reasonable.

Significant Savings

Low interest rate credit cards allow you to save even after the introductory period. Consider the difference between a credit card that charges an interest rate of 9% and one that charges 20%. If you have a 9% rate and carry a balance of $2,000 for an entire year, you will pay $180 in interest. With the higher rate of 20%, the interest expense rises to $400. That comes out to a difference of $220, which is a considerable amount. If you apply this figure to the principal balance, you will be able to pay off the debt much more quickly.

Check the Attached Fees

When looking for a low interest rate credit card, you will want to compare the various offers. In addition to looking at the interest rate, check the fees attached to the card. Some low interest rate credit cards include an annual fee, charges for balance transfers, and other costs. If the interest rate is low but the other fees are high, your overall savings may be reduced. For this reason, it is important to compare the interest rates and the other costs.

Create a Payment Plan

Even with the savings youll receive from a low interest rate credit card, it is wise to make a plan to pay off your balance. A simple way to do this is to check the minimum payment due each month, double that amount, and apply the extra cash toward the principal balance. If the payment due the following month is less, continue to pay the initial amount you chose. This allows you to reduce the outstanding amount in an organized, structured way.

Low interest rate credit cards are an excellent option if you regularly carry a balance. Over time, they can allow you to save a significant amount of money in interest expense. Check out your options online and then apply right away. You can take advantage of low interest rate credit cards immediately and benefits from the savings.

Credit Card Balance Transfers – Know How To Save Money

admin — Fri, 25 Dec 2009 14:04:30 +0000

Credit Card Balance Transfers – Know How To Save Money

In 2004 Americans paid $412 billion dollars in finance charges to the credit card companies. If you contributed to this astronomical amount, you might be considering a 0% interest balance transfer to knock down those monthly payments. You also might think that this is a simple choice, that of course you should opt for a card that does not charge interest over any other card that does. Well, before you take up credit-card hopping as this month’s attempt at exercising, there are a few things you should be aware of when it comes to balance transfers.

Balance Transfer Fees. Many balance transfers can cost you a charge of 3% to 5% of your balance. Although many cards will cap this charge at around $50 to $100, some do not, and your charge could very well negate your savings from the lower interest rate.

Universal Default Clause. This policy is practiced by many credit card companies and you need to be aware of it. Under this policy if the cardholder is late on any of their bills, cell phone, electric, car, what have you, the credit card company can instantly take away the promotional interest rate and charge a higher rate.

The Fine Print and the *. Be sure to scrutinize the fine print and watch out for any conditional symbols such as the asterisk*. Many zero % interest offers are only given to candidates who qualify, namely those with a clean credit history. Be careful when applying under these terms as you might not qualify for the zero % interest but instead end up with an even higher interest rate.

Additional Purchases. Find out if new purchases qualify for the zero% interest as this will have important ramifications. If new purchases do fall under the 0% interest then you can rest easy. If they do not, you must be aware of the consequences. Let’s say you transfer $5,000 and then make additional purchases of $500. Any payments you make will go towards the $5,000 first and the $500 will instead accrue interest at the higher interest rate until the entire $5,000 is paid. That $500 might end up costing you more than you saved with the balance transfer. **It is important to note that the balance transfer fee usually counts as a new purchase.

But do not be discouraged, balance transfers are a powerful fiscal tool, if used properly. Follow these steps and you are sure to beat the house.

Destroy The Old Card. Do not give the temptation a chance. Like the arms of an ex-lover you are trying to leave, you do not want to be wrapped up by them…again.

Destroy The New Card. If your main goal is to pay down the balance, cut the new card as well and you will not have to worry about interest charges on new purchases. Simply pay down your debt at zero interest.

Pay All Of Your Bills On Time. Do not fall prey to the universal default clause. Pay all of your bills (phone, auto, mortgage, etc.) on time and you will retain your zero % interest.

Call The Credit Card Company. When your promotional rate comes to an end, before transferring to another card, call your credit card company and tell them you are going to transfer your balance if they cannot give you a low interest rate. It will not be 0%, but it might be much safer then jumping to a new card and repeating this precarious process.

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Low Interest Rate Credit Cards: Start Saving Today

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