What It Takes To Get The Lowest Rate Credit Cards
Many consumers carry credit cards in lieu of cash. Millions also carry a monthly balance which accrues interest. To help save on excess interest, most people want to find the lowest rate credit cards possible.
The people who qualify for a lower interest rate are in the minority. There are ways to increase your eligibility changes. It also helps to understand interest rate changes and how your low rate may not stay that way for long.
Qualifying For Lowest Rate Credit Cards
While there is no magic formula for getting approval for a low rate credit card, there are a few things you can do to increase your changes. At the very least, you create a better credit score for future credit applications.
- Never miss a payment
- Establish credit if you have not already
- Limit credit usage
Missing a credit card payment is one of the worse things you can do for your credit. A fee is not the worst thing that happens. Instead, the mistake is listed on your credit report for seven years, which affects you eligibility for low rates and new credit.
You will only be able to apply for a credit card interest low rate if you already have established credit. This is not difficult. Open a bank account and use a debit card. If possible, apply for a single credit card which you pay off at the end of every month. Any type of financial aid or student loans you pay back also helps establish credit.
The less credit you actually use, the better your credit report looks. While you may have a $10,000 limit, ideally, you should never use more than $2,500 or $3,000 of it at any given time. Maxing out your credit makes creditors see you as unreliable and unable to manage money.
Types Of Interest Rates
A credit card has several types of interest rates. While the lowest interest rate credit card may have an APR of 5% on purchases, balance transfer APR may be 10%. A cash advance could have an APR of 12%. You must choose credit cards based upon how you plan to use them. Always look for lower interest for the type of use that is right for you.
You should also look carefully at whether the rate is promotional, fixed or variable. The lowest rate credit cards often start at a promotional rate, which increases after six months to a year. You will be provided with the new rate when you apply. A fixed rate means your low rate will remain the same for a predetermined amount of time.
A variable rate means the rate fluctuates based upon the interest index used by the credit provider. While the rate may start low, significant index changes and your rate could as much as double within a few months. Be sure you know the type of rate your card uses before applying so there are no surprises.
Using The Lowest Rate Credit Cards
Two of the most common uses for lower rate credit cards are balance transfers and occasional large purchases. Due to the low rate, you can save on interest by transferring a balance from a higher rate card. For large purchases, a lower rate is always the best alternative.
In order to maintain a lower rate, always pay your bill on time. Try to pay the full amount or at least more than the minimum. The better financial management skills you show, the less likely you are to have your rate increased randomly.
Learn about credit card rates, fees and deals, written by an experienced team of editors and writers, with focus on understanding instant credit card approval process and information about making an application for credit card with bad credit.
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