One of the most popular approaches to getting a handle on one’s debt is through low interest rate credit cards. The average interest rate on most credit cards is close to 17%, but low interest cards are usually offered at around 10%. The truth is that low interest cards can vary as either fixed or variable rate cards. If you are the kind that carries a monthly balance, then the best option is a fixed rate card. However to get these cards, it is important that one have a good credit score.
So what’s in it for the credit companies if they can earn only a low interest rate on your principal? It is seldom as simple as just a low interest rate. Companies make sure they make up for these rates by levying annual fees that are relatively high and promotional interest rates that last only for a few months. So choosing a low interest card should be done with some precautions. This involves thorough research which is now made easy by the Web and reading the fine print.
A great credit score can be very helpful when negotiating a deal with the card company; for instance bringing the rate down from 10% to 7% can be accomplished if your numbers are good. If on the other hand, your credit score is poor then you may not have the same wiggle room, but income assurance with documentation will allow a significant lowering of the interest rate. This way the company is assured that you are capable of sustaining a monthly payment.
The annual fee is the biggest caveat that consumers need to watch out for. When shopping for a low interest Aussie credit card, it is recommended that one look for a zero or low annual fee. Truth be told, a high annual fee may not compensate for the low interest rate that one negotiates; in that the numbers may not make sense in the end. The other caveat is the duration for which the interest rate is offered. Read the fine print carefully to see how high your rate can balloon up to. You may start with a low rate but end up with tremendously high rates before you even realize it.
You can make a tremendous savings and decrease how much you owe through a low interest Aussie credit card. Here are some of the reasons low interest cards are so popular.
Paying off a debt by transferring your balance to the low interest card is perhaps the most utilized benefit. Here especially, the 0% offer even for a brief duration can be very helpful to get a head start on debt reduction overall. This will also help you consolidate your debts, alleviating you from the pressure of keeping track of several payments while doing it at a low interest rate. The ideas is that the principal can be paid much more quickly if the interest rate is in your favor.
Reward points have become commonplace with credit cards. Most companies offer this system as incentives for customers choosing between the different low interest options. While cash back seems to be the most popular choice, travel, restaurants, and spectator events are offered as rewards that are earned for money charged on the card albeit with some restrictions.
Do keep in mind that a low interest card does not mean that you can overspend just because the interest you may incur is low. The truth is that the interest rate lasts only for the promotional period especially if it is a 0% card. This period should be utilized to pay off as much of your debts as possible and should be not be considered as a license to incur more debt. Between low interest rates, balance transfer and debt consolidation, a consumer should aim to capitalize on this most likely temporary interest rate and aim towards emancipation from debt. So look closely at annual fees, interest rates and the duration of these benefits before signing up. Thorough research can mean the difference between financial freedom and collection agency calls. Remember that even the best interest rate is useful only if you know how to take advantage of it.
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