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Americans today are always looking for a better deal on a credit card. Many find the answer to their search in low interest rate credit cards. These credit cards present appealing offers with less than average annual percentage rate or APR. The current average APR on mainstream credit cards is approximately 13.88%. Low credit cards interest rates simply have to beat that APR.
An important topic when discussing best low interest credit cards is the annual percentage rate. On your credit card billing statement you will see two types of finance charges: periodic rate (monthly or daily) and the annual percentage rate. Your monthly periodic rate will be the APR divided by 12.
For example if you had a $100 account balance and your APR was 12%, divide the 12% by the twelve months of the year to get a monthly periodic rate of 1%. To calculate the monthly finance charge, take your average daily balance and multiply it by the monthly periodic rate. In this case a balance of $100 multiplied by a monthly period rate of 1% gives a monthly finance charge of $1.
When considering more than one credit card it is helpful to do these calculations to see how much per month you will actually be paying for your credit. When doing these calculations you must remember that some credit cards have varying APRs while others are fixed low interest credit cards.
Are Low Interest Credit Cards for You?
Finding a low interest rate credit card may appear to be easy with all the online advertisements and mail advertisements you routinely receive about low interest cheap credit cards. In reality it’s not always that easy to qualify for advertised low interest rates unless you have excellent credit scores. If you can qualify, there are distinct advantages to low interest cards.
As a financial strategy, some people switch credit cards often to take advantage of a new low APR. Switching to a card with a lower interest rate will save you money especially on balance transfers. Low interest credit cards if used well can help you to bring down existing high balances. Remember, however, that you must make sure to make all your payments on time and to keep your credit score in good shape. The better your credit score the more likely you are to qualify for credit cards with low interest rates.