Low Rate Credit Cards
If you can’t pay off your balance every month, you may be better off choosing a low-interest credit card. Some low interest credit cards come with a 0% introductory rate while others have a low, ongoing rate. However, remember that these cards generally require a good to excellent credit rating for approval.
What is a low rate credit card?
The low rate credit card is a kind of credit card with a lower-than-average interest rate. The rate is lower than the average APR, and could be down to 0% sometimes.
What does ‘low rate’ mean?
The interest rate that a bank uses to advertise its credit card is usually the purchase rate - the interest that applies to the balance portion of normal purchases and payments. The average interest rate is about 17-18%. Other transactions, such as cash advances and balance transfers, are set at different rates.
This ratio is shown as the annual percentage ratio (APR), which is the amount of interest that the balance is theoretically attracted during the year. Interest is actually calculated daily, daily percentage rate, and applied once a month on your credit card statement. You can calculate the daily percentage rate as APR%/ 365.
At the end of the interest-free date, if your account balance is ongoing, interest rates will begin to take effect.
What types of low interest cards are there?
There are mainly two types of low interest cards:
Do you need a low rate credit card?
If you don’t pay off your balance in full every month and need the security of a low rate in the future. And if you already have a large balance, you can apply for a low rate credit card and benefit from this credit card.
What are the benefits of low rate credit cards?
Long-term low rates
Compared to other credit cards, low interest cards offer long-term low interest rates or even 0% introductory period on spending. If you are a person with a monthly balance, it is equivalent to saving a lot of interest.
Some low rate credit cards also offer great sign-up bonuses.
Some credit cards with low rates still offer rewards programs, so you can earn points when you make purchases.
Low annual fee:
Many low interest cards have a very low annual fee than other credit cards. Some really worthy low rate credit cards have $0 annual fee.
What do you need to apply for a low rate credit card?
The issuer will review your personal credit history when determining whether to approve your credit card and what terms you are eligible for. Responsible past use of credit will maximize your chances.
Credit card application
You can apply for a low rate credit card online, in banks or by email depending on the card. And you just need to fill in your personal information and submit your application. The credit card issuer will consider your credit reports and several different factors when reviewing your application to get an idea of your creditworthiness.
How to use a low rate credit card?
Read your credit card terms and conditions.
You need to have an understanding of the terms of your credit card in order to use it better and avoid paying extra fees.
Make sure you know how long your low interest rate will last
Although low rate credit cards offer a very low interest rate, the interest rate will revert to the higher interest after the period of time, such six months or one year.
Try not to take out cash
Because the interest rate on cash is still high, we don’t recommend you to use these cards to take out cash.
Pay your bill on time
Low rate credit cards still charge you late payment fees. Therefore, we recommend you to pay the bill in full on time in order to avoid paying extra fees.