2011

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How to Get a Low Interest Rate Credit Card

 

Most people are looking to open credit card accounts with low interest rates, and why not? These cards are easier to maintain because of the lower monthly payments that you need to meet. However, not a lot of people are savvy enough to figure out how to get one. There are a lot of confusing information that you have to deal with and often the card that you choose turns out to be the wrong one after all.  

 

 

 

Understanding Terminology

 

Before you begin your search for low interest rate credit cards, it will help to do your homework.  Boning up on the different terms associated with credit card rates will help you make informed decisions.  

 

• APR.  The APR or annual percentage rate is the interest rate that credit card companies charge you on a yearly basis.  

 

• Fixed/Variable APR.  Fixed rates ideally do not change but over time, there are factors that may prompt an increase. The good thing though is that card companies are obligated by law to inform the consumer of any impending increases before they take effect. A variable APR rises and goes down in accordance with the prime rate.

 

• Introductory Rate.  Most credit card companies lure consumers into opening accounts via the introductory rate. Introductory rates are usually very low, sometimes you aren’t charged at all. But remember that after a certain point, this offer expires and you might end up with higher bills to pay altogether.

 

• FICO Score.  The FICO score is your credit score. Companies use this number as a basis of whether you are a high credit risk or not. The scores can be anywhere from 300 to 850, with 850 being excellent and 300, poor.

 

Shopping Around

 

Now that you have studied up on your terms, it is time to compare credit cards offered in the market.   These are the steps that you typically have to go through:

 

1. Research the interest rates offered by different credit card companies. There are many helpful websites that let you browse interest rates that are available for your FICO score.

 

2. Evaluate offers based on the regular APR instead of the introductory rate.  

 

3. It is essential that you read all additional information such as the Terms and Conditions because often, card companies do not publish actual rates. This is also where you will find additional fees that you will be charged. It should also indicate whether the rates are variable or fixed.

 

4. You will still find credit card offers even if you have a bad credit rating but take note that you will be charged with a yearly fee. You need to look at these fees as they are likely to be high.

 

5. Look for the regulations on late payments. Some companies charge up to 30% on delinquent payments.

 

Making a Choice

 

Before making a final decision, make sure you have made a thorough comparison of the offers available to you. It is advisable to apply to only one, best choice because multiple applications affect your FICO score. Once you are rejected, you may apply to another card company.

 

 

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