Credit Card Introductory Rate
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A good credit card introductory rate is zero percent interest for at least six months with no annual fee and a low fixed rate afterwards. Other offers may include up to twelve months with no interest but the finance charges afterwards may be higher. A zero interest balance transfer credit card may have rewards and special features in addition to make it more appealing to consumers. Some of these features may include cash back rewards, extended warranties, rental car insurance, travel insurance, frequent flyer points, and no annual fees. Banks that offer points on all purchases allow the customer to redeem points earned on airfare, hotel, rental car, and cruises. These types of accounts are usually offered to customers who have good to excellent credit scores.
Cash advances normally accrue higher finance charges than purchases and may also include a fee in addition to finance charges. An ideal credit card introductory rate may not apply to cash advances. A customer would do well to ask questions and read the conditions of the agreement before accepting the account. Knowing all of the features and conditions of the agreement will benefit the borrower. Find out how cash advances are applied and how finance charges are calculated. Most banks charge late fees if the minimum monthly payment is not received in the 25 day grace period.
The ideal way to pay on a charge account that includes finance charges is to pay the balance in full every month. Paying only the minimum monthly payment amount will allow very little of the balance to go to principle taking much longer to pay off the balance and will mean paying more finance charges. A consumer who has difficulty paying the balance in full should be careful to not charge large amounts and to keep the balance as low as possible. A zero interest balance transfer credit card will allow the customer to move balances from accounts that have higher interest. Some banks charge balance transfer fees for each balance transferred.
Be wary of other types of fees charged by banks for revolving accounts. These may include maintenance and cash advance fees, set up charges, over the credit line fees, late fees, and administrative fees. In addition, many banks charge annual fees on revolving accounts. Customers who tend to allow balances to carry over every month would do well starting out with a low credit card introductory rate that has low interest and no annual fees. For individuals who have charge accounts with high finance charges and high annual fees, they should consider transferring balances from these accounts to ones that have better options.
Three types of revolving accounts that are common include secured, regular, and premium. A secured account requires the consumer to open a security deposit account. The credit limit is often based upon the amount the consumer deposits into the account. Regular accounts do not require security and usually have higher limits compared to a secured account. A zero interest balance transfer credit card can be offered through a regular account but are more likely with a premium account. Premium credit cards usually have the highest charge limits and include special features such as travel insurance, frequent flier miles, cash rewards on certain types of purchases, and other benefits. The consumer should make sure that the benefits, special features, and rewards advertised for an account do not include a fee or a charge for having them.
Individuals who have low credit scores should be careful about applying for charge accounts that are advertised specifically to people who can not be approved for a regular account. These accounts are legitimate but they normally have very high finance charges and all kinds of fees associated with them. When shopping for one a person should do their homework and find out the credit card introductory rate and how long that will apply to the account. A customer may start out with a low finance charge but even being one day late on the payments can generally cause the finance charges to shoot up very quickly.
A revolving charge account with a high limit can be a big temptation for some people. To avoid having financial problems a person would do well to use a charge account only when there is an emergency or only when he or she can pay the balance in full every month. Even a zero interest balance transfer credit card can be a temptation. If a balance is on the account at the time that finance charges begin then they will b assessed on that balance. Being disciplined now will make a big difference on indebtedness in the future. Not being able to make payments on time can ruin a person's ability to buy a home or obtain other financial help when needed. Initially a person may not realize how fast that the balance can get out of hand until it is too late. "He that is greedy of gain troubleth his own house; but he that hateth gifts shall live" (Proverbs 15:27).
Many people today are obsessed with lavish spending habits and living above their means. Choosing to live this lifestyle by using a revolving charge account can eventually bring a harsh reality to those who choose this path. This path can eventually lead to bankruptcy court. Being in debt is like carrying around a ton of bricks everyday. The stress is tremendous and can eventually ruin a person's health and his or her marriage. For those who have not walked this road the best advice to them is to make every effort to avoid it.
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