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Monday, 28 May 2012

Best Low Interest Credit Cards

Choosing Best Low Interest Credit Cards

A common question that I hear from most credit card searchers is, "How do I find the best low interest rate credit on the market?" Choosing the best low interest credit card may seem pretty easy; just pick the card with the lowest rate, right? Believe it or not, the lowest rate may not be the best deal. The best indicator to getting your best deal is to accurately gauge your future-spending pattern. We have "crunched" the numbers for you and have come up with the top three areas you should be looking at when choosing that perfect low interest card.

As mentioned above, the best way to begin your quest to find the best low interest credit card is for you to accurately judge your future spending patterns. This may take some honesty and soul searching. The best way we have found is to look at past spending.

Do you regularly carry a balance? Will you be transferring a balance? Do you pay your cards off monthly? Do use them in day-to-day transactions or for large purchases and emergencies? You will find out next why accurately predicting this spending behavior is important.

The first thing to look out for is the obvious the interest rate. There are a lot of cards that offer a low 0% interest rate for a fixed amount of time then the interest rate will resemble the child in the exorcist. These cards are useful if you plan to pay off the balance that you transfer or charge in that fixed amount of time.

Most people do not and the card companies know this. Do not use these cards if you have a past history of running long on your financial commitments. Instead, opt for a higher fixed rate and begin a steady payment plan.

The second thing you should watch is the multiple fees, particularly if you are using a 0% interest card for a fixed time period. Many credit cards will advertise "no annual fee" but will charge a balance transfer fee instead. Some will charge both. Most of your fixed rate credit cards will have an annual fee, which really equates into an interest rate when you think about it; it is a cost of money.

To accurately judge your cost you should estimate the time of repayment that is reasonable for you and the balance you expect to carry. Then, multiply the expected balance by the interest rate that will accrue in a one-year period. (i.e. $5000 x 10.00% = $500). Next, add the annual fee to that number and you have your annual cost of credit. The lowest number wins!

The third thing to consider when choosing a low interest card is reputation. Many cards have a reputation of changing the rules mid game if you hiccup wrong. This practice is called "Universal Default", most of your larger companies are moving away from this practice.

However, you should make sure you ask ahead of time if they have this clause in the agreement. We also suggest that you perform a quick Google search of that card or company you are considering. Search the name and "complaints" and scroll down three or four pages.

You will find quite a few dissatisfied customers for every credit card out there. Some are legitimate gripes, others are people who failed to plan ahead or read the fine print. Ask the company directly about those complaints and judge for yourself if they are valid.

Finally we recommend that you use cards wisely. I know, this is easier said than done, I myself have lagged in this department. Plan your credit card purchases then set the credit card aside to pay that balance off. Use the formula above to see the cost of credit to ensure you are not overpaying; have designed a card comparison calculator for you to use to more accurately judge your choices. Just remember, credit cards are wonderful when used as a tool, but crippling when used as a crutch.

Visit www.directbanc.com for more information about low interest credit cards.

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