Tuesday, 12 June 2012

Low Interest Credit Cards Balance Transfer

What You Should Look for in Low Interest Balance Transfer Credit Cards

People who find themselves in a tight fix with their current credit card don't have to pursue the problematic credit line. The road from bad to worse is easily taken in such cases. On account of their delinquencies, the lender will have raised their interest rates. Very often, the principal of the loan itself may have grown to more than double the amount that they originally took out from the lender. Obviously, without resorting to low interest credit cards, the card holder is trapped in a vicious debt cycle.

What Would be Considered Low Interest Rates for Credit Cards

One of the best moves to make in that situation is to look for another credit card which will accept the balance from your current one. But there are several requirements that the new card should have in order to make resolving the loan easier. First and foremost, the cardholder should verify that it is indeed a low interest credit card.

Normal rates which are extended to people with fair credit scores and people who have no credit scores at all are between 12 % - 17 % computed annually. The range will be different for those people who have excellent credit. The rate may even go down as low as 7 % computed annually for people with excellent credit scores. Then again, people who have poor credit scores are usually assigned interest rates between 14 % - 22 % computed annually. This is because such people are considered high risks for the lender and therefore, the lender wishes to maximize each collection that he makes

There will also be times when low interest credit cards do not actually have low interest rates up front. In such cases, don't be too ready to put the card off as a scam. Examine the rewards that are offered with the card. If it is really a genuine low interest credit card, you should find incentives and rewards that return to the card holder more than half of what he put out in terms of interest charges. Cards of this type are most typically cash back rewards credit cards. The rebate is usually 1 % of the amount of the purchase. In other instances, the rebate may be a little bigger than that.

Actually, cash back rewards cards offer two kinds of cash bonuses for two distinct categories of items. The first category has an upper price limit. The items that are included here are your daily necessities as well the products that you buy regularly. The cardholder is often given the option to alter the products that are included in this list from time to time. This makes it possible for him to adjust the list to conform to his seasonal consumption. Not all products can be included here, as already mentioned. The cash rebates for this category are normally awarded every quarter of the year and the actual amount of the cash returned is normally 5 % of the total purchases of items in that category for the preceding three months. If we divide 5 by 3, we discover that the monthly rebate is actually 1.6 % monthly so that even if your interest rate were 18 % annually, you would end up having all your interest disbursements returned to you. In this case, this type of credit card is not just a low interest credit card but is practically a 0 interest rate credit card. The only difference being that the interest payment is not deducted but reimbursed at some later date.

The Kinds of Low Interest Credit Cards That You Don't Need

On the opposite extreme, you have those low interest credit cards which advertise as little as zero percent interest rates. Although there are actually those which charge no interest at all throughout the lifetime of the card, the greater majority of zero interest offers are limited for a certain introductory period - usually from 6 months to one year. Most balance transfer credit cards have this kind of feature. However, before actually registering for a card, the applicant is advised to ask about the real interest rates after the promotional period is over. These should be the lowest possible for him, given his current credit record, and should not equal or be higher than that of his previous, compromised credit card.

In general, when confronted with attractive features such as zero interest rates, look past all of them to the conditions that will be prevalent after any introductory phase is over. You may have to bring the topic around to the nitty-gritty in spite of the efforts of over-zealous card promoters: Excuse me, sir, what are the normally prevalent interest rates and penalty fees?

Thank you for reading & good luck..

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