Credit Card Introductory Rate
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.
Credit Card Interest RatesCredit card interest rates can be expensive for those who are part of the major portion of Americans who owe an average of $7,000 to $8,000 in debt to creditors. A good rate should generally fall below 13%. Any that is higher than 12% is too high. Many consumers typically pay between 13% and 22% with some as high as a whopping 35%. A wise consumer will, out of necessity, find a way to lower rates, pay off balances or change creditors in order to have the benefits of usage without the penalties of astronomical percentages.
Creditors are the only businesses that have not received controls on raising interest at their discretion. Most consumers are surprised to learn that most creditors operate out of South Dakota and Delaware because the usury laws were changed in those states to accommodate a no-cap policy. Creditors operating out of those states can raise rates anytime and to whatever percentage cardholders can be prodded to pay. This usury law was put into effect in the 1980's and has continued to allow creditors free reign with the consumer's credit card interest rate.
For any reason, creditors can raise their rates under consumers' noses until cardholders contact them for an explanation. Most consumers are unaware that companies are well within their rights to raise interest any time cardholders are seen as a risk to their investment. Consumers may wonder why the percentage has suddenly gotten higher even though they signed a contract with the company and agreed on an advertised rate. Most agreements have a clause within the contract that states that the company can raise the credit card interest rate anytime they believe that the consumer is a risk to paying off the account.
Risks that can raise the percentage can be anything from a one day late payment on the electric bill to a late payment on the mortgage. Even though these bills have absolutely nothing to do with credit card payments, creditors can access credit reports anytime and check for any late payments. Even if the cardholder has never, ever had a late payment for anything, but just this once, the creditor can raise the percentage. So cardholders shouldn't assume that original credit card interest rates that were agreed to will hold.
The percentages can also be raised for absolutely no reason by creditors if they only provide consumers with a 15-day notice before processing the higher rate. Cardholders may have signed a contract and agreed to pay 7% on the card. If the creditor decides to raise the credit card interest rate 6 months later, they can according to the notice provided within the contract. Most of these notices state that the company can raise rates for any reason providing they give a 15 day notice. So consumers should always read the fine print on any agreement before signing.
Another way in which consumers can be charged without being aware is through penalty fees for late payments. Creditors have no limit to the amount they may charge for late fees even if consumers are late even one time on a payment. A cardholder may be used to the typical $10 charge on a late payment, but should be prepared to possibly pay much more. There are any number of ways that cardholders can lose money through hidden fees and the unrestricted financial policies of most creditors.
It is important to know that creditors periodically check consumer reports as do other financial institutions. Those who have found that their credit card interest rates have risen lately, but haven't been late with payments, may assume that there is another area in which they've made a late payment. Deteriorating credit is a cyclical process and one company will determine their interest rates from the consumer's dealings with another company.
Cardholders need to be aware of the cascading effect of late payments and minimum balance payments. This can raise credit card interest rates as well as other rates and cause an overall increase in outgoing monthly payments. Consumers must be knowledgeable about all the contracts they sign and about all policies that govern creditors in order to wisely manage their money. "For wisdom is better than rubies; and all the things that may be desired are not to be compared to it." (Proverbs 8:11)
Free interest rate quotes are helpful in determining which lending company to ultimately choose to do business with when searching for the best loan terms. Estimates are offered by many online lending sources and can be obtained by a simple online application. Web surfers can compare options by shopping around with several different lending sources that offer estimates. Those who are in need of a home loan, car loan, or any unsecured loan will want to receive the best estimates in order to save money on monthly payments. "Keep therefore the words of this covenant, and do them, that ye may prosper in all that ye do." (Deuteronomy 29:9)
It is not always easy to receive the best interest rate quotes for loans since loan companies are in the business to make money. It is to their benefit to charge higher percentage rates in order to receive the most pay back for their investment. There are several ways, however, that borrowers can insure receiving the best estimates for a loan. A financial fact of life is that lending institutions reserve their lowest interest rates for consumers who have the best credit histories and scores. Free interest rate quotes will reflect what standing the borrower likely will have when finally selecting which lending source to deal with.
In order to have a good credit history and score, it is important to be aware of several things that will insure good numbers from a lending source. Simple habits like paying all of bills on time are very important in maintaining a good credit history. When lenders check a consumer's credit history and find laziness in making payments on time or missed payments along the way, the consumer will be penalized by receiving higher interest rate quotes. Also, those who are trying to prepare their credit before taking on a large loan by closing out credit card accounts may end up hurting their credit more than helping it.
Banks and other lending sources tend to view the close out of long term accounts in the negative and may consider the potential borrower as they would someone with less established credit. It is usually to the consumer's advantage to keep long term credit accounts with card companies and other unsecured loan sources as long as they are making payments on time. Even if consumers have a bit of a debt in these areas, on time payments for the long term indicates to lending institutions that the borrower is responsible and will make payments for their loan as well. This can help translate into good interest rate quotes as the borrower compares the different estimates online or over the phone.
In order to further save money through low estimates is for borrowers to make sure a large down payment is ready for the qualifying, preferred loan. It is especially helpful for those who are looking for low estimates for home loans. People who can come up with at least 20% of the overall amount for a down payment will help themselves significantly with the approval process and getting a better percentage. The larger the down payment offered, the lower the estimates will be. Even in the case of automobiles loans, consumers will receive better interest rate quotes with a greater down payment.
Most companies that offer estimates will generally calculate in most of the fees and expenses associated with the loan request. Applicants need to make sure that there are not hidden fees or charges when they are ready to sign on the dotted line. Fees such as closing costs, mortgage insurance and lending fees that are included within a loan package. The free interest rate quotes are important, but not the only consideration when searching for the best loan. Some lenders offer less fees on certain loan features and some require higher charges for other services.
There are enough financial variables from one lending source to another to make it worthwhile to carefully compare several companies that may offer free interest rate quotes. Other considerations when looking for a loan will also include the monthly payment amount, loan terms regarding fixed or variable rates and other pay off options. Receiving the lowest estimates may not be the only factor to consider. There are many online sources that can offer further information that can help determine which interest rate and loan terms are the best.