Credit Cards Guide - Step 2 of 7 - Interest

Shopping around for a great credit card interest rate could save you thousands but a low rate doesn't always equal a great deal - the best credit card for you will depend on your individual needs and credit card use. We'll look at the two main credit card types to help you narrow down your search.

Low Rate Credit Cards

Low rate credit cards have a low interest rate which is usually accompanied by an annual fee. They are the "no frills" cards on the market because they are on limited features and services that other types of cards offer and typically don’t have any rewards programs attached. The main benefit of these cards is certainly the lower interest rate compared to standard cards.

If you don’t pay off your monthly credit card balance in full each month then this may be a great card for you. As you will be incurring interest each month your main objective is to keep interest rates to a minimum so you pay less in interest charges.

While rewards are enticing, if you often carry credit card debt and can’t pay off your full balance each month you will do better financially to find a low rate card rather than reward cards with premium features. Another option if you can’t pay off your balance is to look at personal loans which often have a lower interest rate than credit cards. Low rate cards interest rates are often 5-7% lower than standard credit card rates, which can add up to thousands of dollars in interest when paying down a credit card debt.

Standard Rate Credit Cards

If you are the conscientious type who always pays off their credit card balance each month, then you get a big thumbs up and don’t need to be concerned with interest rates as much. You will find more benefit in credit cards with low or no annual fees and perhaps a rewards program.

Low or no annual fee credit cards may offer a small annual fee or none at all for the life of the card or for a certain amount of time. Credit cards generally have trade-offs, and the trade-off of getting a card with no annual fee is generally a higher interest rate than low rate cards. Some low or no annual fee cards may have some sort of promotion whereby you have to spend a certain amount in order to waive the fee, however check with the credit card provider for full terms and conditions.

If you are committed to paying off your credit card debt in full each month than higher interest rates will be of little concern to you but the rewards and low annual fees will be.

Walk through the complete Home Loans Step by Step guides below;

Credit Cards Guide - Step 1 of 7 - Usage
Credit Cards Guide - Step 2 of 7 - Interest
Credit Cards Guide - Step 3 of 7 - Rewards
Credit Cards Guide - Step 4 of 7 - Features
Credit Cards Guide - Step 5 of 7 - Brands
Credit Cards Guide - Step 6 of 7 - Type
Credit Cards Guide - Step 7 of 7 - Checklist



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