When deciding to apply for a credit card, there are many types to choose from and this can become overwhelming. The very first question you should ask yourself is this: “Is it likely that I will be carrying a balance on this card?” If you don’t pay off one hundred percent of your balance every month, then you should concentrate on only using low interest credit cards. These will often be advertised as having a low “APR” rate, and it is important first to understand what this is.
The acronym APR stands for Annual Percentage Rate, which is just a fancy mathematical way of expressing how much interest you will be paying on overdue payments. Obviously, if you always make your payments on time then you never pay interest, in which case a low interest credit card may not be the best choice for you. Instead, consider looking for cards that offer rewards or cash back. But if you think you might carry a balance, even for one month, then low interest credit cards are what you’ll be primarily interested in. They will save you the most in the long run because a high interest payment on a rewards card can easily be worth more than the reward itself.
After deciding that a low interest credit card is the appropriate choice for you, the next step is finding one that will provide you with the best value in the long run. This may look like a daunting task, as low interest credit cards are more abundant than any other type of credit card available today. However, it is really simply a matter of math, knowing your spending patterns, and reading the fine print. One of the most popular methods to attract potential card users is offering an APR at 0% for a certain length of time. This essentially means that you can charge up to your limit and not owe the credit company a cent until their specified date.
Unfortunately, once that specified date hits, the card can hardly be classified as low-interest anymore, as they can shoot up to as much as 15%. So logically, if you are looking for something to carry a temporary balance on, then these can be very useful. However, if you carry that balance even one day past the specified 0% period, you can really get slapped hard. In this case you may want to consider a card with a less attractive initial offer, as these will often not change as radically, if at all.
As when applying for any credit card, it is vitally important to read the fine print. Many low interest credit cards today offer no annual fee, however some do. If you are considering a card that does, make sure that you factor the cost of the fee into the cost of the interest. A card with a low APR but high annual fees could very well not be worth it in the long run. If you keep track of your spending patterns and do a little research, a low interest credit card can indeed be a valuable addition to your life.