Finding A Low Interest Credit Card

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Thursday, 24 July 2008

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By:Jeff Moynihan

You need to look for a low interest credit card when it is most likely that you will not be making the payment or only be making partial payment within the grace period or the due date. By using your card what you are basically doing is that you are taking a short term loan without any interest as long as you are paying back this loan within due date. Credit companies allow you to make partial payment and charge a certain percentage as interest on the remaining value.

There are many companies that offer low interest rates. Some of them offer 0% interest for the first few months to attract customers. After the first few months you will be charged a certain percentage of interest. In certain cases the initial interest will be set low for the first few months and people tend to forget completion of the offer period and continue to spend excessively.

Not many are aware that the interest rates vary for purchases and cash advances. Interest on the cash advance is much higher than the interest on purchases.

Initially set credit limit is normally increased after a card holder proves a good credit history. This is to retain a good customer. Sometimes, if you are lucky enough and have an excellent credit history then you might get low interest rate offers.

Whenever you come across a low interest credit card offer it has to raise an alarm in your mind on what the card companies are trying to do to you. They are inviting you to spend more than what you can afford and by offering low interest rates they unconsciously de-motivate you from paying the bills in full. The ultimate benefit is the money earned through the interest value gained. By offering 0% interest rates for the first few months, they not only entice you to sign up but also that you get used to spending without worrying about the interests. You continue to spend even after the offer period, leading to huge monthly bills, ending up in debt.

Statistics show that most card companies earn their profit mostly through the interest paid by their customers and not on their yearly subscription fees

Card companies when they keep their interest rates low, they tend to reduce the grace period for the payment of bills. So it not always that advantageous to have the interest rates to be lower while grace period for the payment of bills is shorter. It really depends on how you would like to use your credit card.

Summary:
Low interest credit card helps you save a considerable amount of money when you have huge financial commitment and cannot meet your monthly credit card bills fully. It may not be that advantageous feature if you are going to pay your monthly bill regularly. Then, what would be highly beneficial here is longer grace period. Keep a close check on your usage as lower interest rates might invite you to spend more than what you an afford leading to bad debt.

Article Source: http://www.dailynewarticles.com

For information on finding aLow Interest Credit Card,The article author Jeff M recommends that you visit the-credit-card-pros.com