Are you someone who frequently carries a balance on your card? If so, you might find a low interest credit card more suitable to your needs.
As you are well aware, interest on credit cards usually have a compounded type of calculation. What this means in its most basic form, is that you are not only paying interest on your principal, which includes new purchases and any unpaid balance to date, but also on any accumulated interest of previous periods. Hence the term “interest on interest”.
Most “other credit cards have other perks such as cashback, travel points, rewards, discounts on gas etc, but they will all usually carry a higher interest rate typically above 15% and commonly 19.99% and higher. What you should consider, especially since your curiosity led you here, is a card who’s primary feature is an interest rate under 11%.
Many folks have one or two credit cards that may already have a substantial balance and are looking to take advantage of these low interest rates for existing purchases.
With this type of card in your holster, you can easily transfer your balance from one of your higher interest cards, over to this one. The compound interest rules will still apply, however you will have a much easier time getting in front of some of that debt you’ve accumulated.
To be quite honest, choosing a card isn’t rocket science, but it does take an understanding of your personal spending habits and what you plan on using the card for.
Essentially there are 2 main choices.
Annual fee and no annual fee. That, my friend, is what it all boils down to. Usually a card with no annual fee will give you up front savings but a slightly higher rate, whereas the card with an annual fee will offer lower rates from the get go, as long as you are willing and able to sign off on the yearly charges.
Choose the card with the low-interest features that you require.
If you want your low yearly A.P.R. to apply to your cash advances and balance transfers alike then make sure the card you are applying for has these features currently available.
Many of these low-interest cards have secondary features that might be of use such as bonus dollars, purchase price protection, comprehensive insurance and promotional annual interest rates. Just make sure that you are aware that these perks are silver medals to your main objective. Low interest, permanently.
Ultimately, it all comes down to determining if the annual fee outweighs the interest charges you might incur using a card with slightly higher interest rates. Either way, you’ll be allocating your funds much more economically, which gives you some breathing room in this pressure cooker of financial life.