Compare Credit Card Interest Rates
To compare credit card interest rates, the debtor's credit score must be high and remain consistent so that they will be eligible for credit cards with low interest rates. For example: if a debtor has a credit score over 700, and their current credit card is offering a 15% interest rate, they should search out lower interest cards. These companies may advertise a 9.9% rate, but if the small print is read, it will also state intervals of raised rates, such as 12%, 14%, 18%, and 22%. The 9.9% interest rate is reserved for those with a credit score close to 800. These are the super high credit scores, that most people do not posses. The next credit interest rate is 12%, and 14%. Depending where the creditor draws the line, the person with a 700 credit score will most likely receive either rate. Both rates are lower when the debtor decides to compare credit card interest rates to the one they already posses. They may want to open an account with the lower rate credit card, and transfer the balance.
Many cards will allow a very low (1.5%) or 0% interest rate on balance transfers when opening a new account. Instead of closing the old account, it is important that the debtor leave it open, but don't use it, and keep its balance at zero. The open, but not used, credit card account has a limit that will help improve the credit score, when applying for loans or other types of credit. 30% of a credit reporting score is based on the debt to credit limit ratio. To effectively compare credit card interest rates, a debtor will need to know their debt to credit ratio. This means that if a debtor has a $10,000 credit limit combining all cards, and $2,000 in debt or balances combined, they would have a 20% debt to credit ratio. This is an acceptable ratio for being offered credit cards with low interest rates. If the debtor closes one of their credit accounts with a $5000 limit, they now have a combined $5000 credit limit with $2,000 in balances. To compare credit card interest rates when their debt to credit ratio has increased to 40% without adding any more debt can be fruitless. This is detrimental to the credit score, and finding credit cards with low interest rates will be hard.
Ideally, a debtor will want to stay below a 25% debt to credit ratio. Fortunately, if the debtor goes above the acceptable ratio, they can always strategically pay down their debt, and the credit score will be raised within 30 days, making them eligible for credit cards with low interest rates. The key to strategically lowering the debt is to make sure that each card individually has a 25% or lower debt to credit ratio. For example: on a $1000 limit card, do not have a balance higher than $250; on a $500 limit card, do not have a balance higher than $125; and on a $5000 limit card, do not have a balance higher than $1250. Even if the combined limits and combined balances total a less than 25% ratio, the ratio is applied to each card individually and the cards combined, so transfer those balances and spread out the debt. Other options are to get a consolidation loan with fixed payments and clear all the debt from the credit cards (but don't close the accounts). A consolidation loan (as long as it has a fixed payment schedule) is considered an installment loan, and is not included on the revolving line of credit debt to credit limit ratios.
Too many installment loans can be detrimental as well. As long as only house, car, and student loan installment loans are present...adding one more is okay. Any more than that and the credit score may begin to lower because of too many fixed monthly payments. Receiving credit cards with low interest rates is a good idea if the debtor plans on using them. While credit should not be used unless the debtor intends to pay it back the following month, our society has become dependent on the very nature of credit itself. Most people do not pay outright for their homes, cars, education, or traveling. It would be impossible for most people to own a home, car, or get an education without the use of credit. Since using credit is intertwined, not only in our economy, but in the necessities of life, caution should be taken when choosing a creditor or lender. The ultimate goal really should be to pay off our debt, not accumulate more. "Owe no man anything." (Romans 13:8)
Credit Cards With Low Interest RatesLow interest rate credit cards are the latest means of banks luring new customers to let them be the ones to handle their charge account purchases, insurance, and maybe even loans. Nearly every day the mail coming to anyone in the U.S. will have some sort of offer from a major company. Most of these offers are to consolidate all of a person's debt by transferring other balances to one account at an appealing interest rate. This can be helpful to the debtor if that low rate stays in effect until the debt is paid off, and no additional charges are put on that account. Many people defeat the purpose of this plan when they simply use another card for charges, and let the debt increase anyway.
There are also credit cards with low interest rates that are interested in having a customer open an account at this low rate, which is in effect for a limited time. At the end of the designated time, the interest is raised, and sometimes by an alarming rate. The customer must be very discriminating when shopping for a charge card, so as not to become ensnared by high rates that are difficult to pay off. The current rates on some of the online cards are roughly 10% to 11%, but there are lower rates if you search diligently.
Another offer that is becoming more common among banks offering credit cards with low interest rates is a "cash back" or "rewards" plan, where purchases add up to points of credit or specific items offered at very low prices. One card offers to put money in a savings account for you after you have spent a specific amount. Another offers air travel miles for dollars charged. This competition for business is good for the credit card holder, of course, but there are some glitches in the system customers must be aware of as well. Credit cards with low rates are making up what is lost in interest by charging high late fees if a payment is not received exactly on the day due, and many also have the stipulation that in the event of default of any kind (late payment or skipped payment), the rate is substantially increased. With some of these plans, the customer would be charged a whopping 21% interest. Human frailty being what it is, the chances are good that at some time before the debt is paid off there will be one time when a payment doesn't reach the destination on the appointed date. Scripture describes the goodness of a man to those indebted to him: "And hath not oppressed any, but hath restored to the debtor his pledge, hath spoiled none by violence, hath given his bread to the hungry, and hath covered the naked with a garment;" (Ezekiel 18:7)
Many of the low interest rate credit cards are offering insurance against missed payments, if the miss is due to illness or injury that affects the cardholder's ability to pay. Insurance against identity theft is another type of policy most of these companies are now offering to customers. Considering the frequency with which identity theft is happening in our society, this might be something customers should at least consider. The insurance is as much for the benefit of the low interest rate credit cards company as for the customer. Charges made by an unauthorized person cost the company considerably large sums. The true owner of the card is not legally responsible for charges made by someone who has stolen his card or used his account number.
The ability to apply for credit cards with low interest rates on the Internet is a real boon to customers, in that it doesn't take weeks to get a card like in the past, when everything had to be done through the mail. The low interest rate credit cards still have to be received that way, of course, but the applications can be processed and answers returned to the customers very quickly by accessing the Internet. Another phenomenon an applicant will find on the Internet is the variety of companies who offer cards from many banks through their website. Instead of dealing directly with the bank, you apply through these companies, and they deal with the vendors. It isn't obvious right away whether this is an advantage to the customer or not, but it is a reality.
Since so much business is conducted by the use of credit cards in our society, that having a card has become a necessity. That being the case, a person might as well find credit cards with low interest rates to use. Cards give an added bit of security in situations where someone runs short of cash in an emergency, and there are times when they simply afford convenience. When a purchase is made with plastic, there are two ways you can prove you purchased the item and when. First, you get a receipt at the store, and second, your statement will show the exact date and place of purchase. These are necessary if the item is returned for some reason.
According to a recent report, in the United States population, the group with the largest percentage of income going to pay credit card debt (50%) is the 18-25-year-olds. The report doesn't say how well they are paying back the debt, but one hopes they have learned to be responsible about their debt. Credit cards with low interest rates are particularly attractive to young people, who worry less about the future than their older counterparts.