If you normally avoid using credit cards or use them very sparingly, then you may not know that there are credit cards with low interest rates that can prove to be really useful. These cards come with low enough interest rates to make payments on balances quite affordable. Many people opt for these cards when they need a convenient and quick alternative to paying with cash. Learn more about credit cards with low interest rates before you sign up for your very own one.
Two Types of Interest Rates
Credit cards typically come with either of two types of interest rates- fixed or variable. The fixed rate does not fluctuate while the variable rate does.
Fixed Rate Credit Cards
The annual percentage rate or APR that is charged on these credit cards with low interest rates remains the same at all times. This rate is not based on the U.S. Prime Rate or the LIBOR rate and does not move in line with them. However, the rate may increase if you delay payments or exceed your credit limits.
The 9.9% basic credit cards are some of the most popular fixed rate credit cards with low interest rates that you will still find in the market today. However, not many issuers offer variants of these cards since variable rate options are preferred by customers.
Variable Rate Credit Cards
A variable rate card comes with an APR that is linked to the U.S. Prime Rate or LIBOR rate. When these change, the rate on the credit card changes too. The issuer usually adds a margin to the rate index to determine the APR on your variable rate credit cards with low interest rates. When the U.S. Prime Rate/ LIBOR rate moves, the card’s margin is added to it to arrive at the new APR payable. Since these base rates move often, your credit card APR will also keep fluctuating. Issuers generally review the rate on a monthly basis and tweak the credit card APR accordingly.
Introductory Rates
There is another aspect to consider when you are comparing interest rates of various cards. This is the introductory rate. Since there is immense competition in the credit cards industry, many issuers come up with attractive introductory rates that will last for a limited initial period. On some cards this period may be a month while on others the special rate lasts up to a year. If your credit cards with low interest rates have an introductory special rate, you will be able to make purchases during the specified period at the lower APR. It is very important for you to understand the terms of such introductory offers fully before you start making your purchases so that you can avoid running up huge bills beyond the pre-specified inaugural period.
Choosing your credit cards with low interest rates can be a confusing affair unless you know enough about APRs and payment terms to make a judicious comparison between various offers. Pick the one that offers the best rate as well as attractive rewards to ensure that you get the very best deal in the market.