Educated consumers are well aware of the motto “too good to be true” and shop accordingly, especially when dealing with low interest credit cards. For every credit card offer promoting interest rates that are ”free,” ”low” or “reasonable,” consumers need to examine the supporting documentation to ensure there are no hidden negative surprises.
Credit Card Checklist
Low interest credit cards are exactly that, offers from companies that offer a lower than average interest rates for cardholders. For those interested in using the lines of credit for debt consolidation or large ticket purchases, that may seem like a good deal.
However, there are catches that you need to be aware of including:
- Time Frames: Many low interest rate credit cards are introductory offers from credit card issuers, meaning that the offer will only apply as long as the balance is paid off based on the issuers stated schedule. If a cardholder makes a payment that is even one day late, the offer will be void and a highest interest rate will be charged.
- Annual Fees: Every credit card is different and offers unique benefits. Those seeking low interest credit card may have to pay an annual fee to the cardholder.
- Hard to Get: The credit crunch is still alive and well in America and those with blemishes on their credit history are not entitled to the best interest rates. If you have a history of making late payments, filing for bankruptcy or have too much debt versus your available credit limit, securing a low rate interest credit card may be a next to impossible task.
- Accruing Debt: It is important to remember that low interest credit cards are designed to help the issuer make a profit. Purchases made on low interest rate credit cards still need to be paid back with interest! Borrowing cheap money can still cost thousands of dollars.
- Hidden Charges: Credit card issuers need to make up for the money they lose by offering low interest rate credit cards. Keep your eyes open because your agreement for the line of credit may be filled with a slew of fees and penalties they can levy at any time.
As long as you understand the limitations and possible penalties associated with using a low interest rate credit card, the plastic can still be incredibly useful.