Many credit cards have a APR of 18% or more. A new breed of low interest credit cards on the market is offering rates as low as half that of your average credit card. If you typically don't pay your credit card bill in full each month these cards can save you money in interest payments. If your credit card debts are long term you may find your can substantially cut your interest charges and ensure more of your repayments go towards paying off the principle debt.
However, there is a downside to low interest credit cards. This is that you won't receive any reward programmes such as frequent flyer points. Reward schemes are perks associated with credit card use. For example you can earn 1%-5% credit on every purchase you make with a higher interest rate credit card. If you use your card frequently this can add up to substantial savings and reduce your overall payment to your credit card company.
However, if you do not use your credit card for many purchases this may not be worth it. Another consideration is if you regularly make rather small purchases. This will mean that rewards may again not be feasible for you. In this case a lower interest credit card might offer the best credit card rate for your needs.
If you make larger purchases then rewards may be the best thing for you, as the 1%-5% credits on each purchase will save you a considerable amount of money. Therefore, reducing the cost per purchase and reducing the amount of money you owe to your credit card issuer. The savings may very likely offset higher interest rates and make a lower interest rate credit card not very practical.
If you are in the habit of paying off your credit card debts monthly you may want to consider the pros and cons of low interest credit cards. What you gain with low interest, you will lose with reward benefits. If your paying your monthly credit card bill on time it's unlikely you will be paying any interest and as a result a low APR won't have much benefit for you. However, the reward programs will benefit you on every purchase.
You can make fast comparisons of low interest credit cards on line and by this means get the best credit card interest rates. There are many websites available which show the different credit cards and what they are offering you. They have reviews and comparisons available to help you make an educated decision.
Now that you are aware of the advantages and disadvantages of low interest credit cards you can make an educated decision as to whether this type of card will work for you. Review your requirements and think about your spending patterns. In this way you will be able to make the right decision on which credit card will be best for you and your needs.
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Richard Greenwood is Director of Australian finance and credit card website http://www.click4credit.com.au. Click4Credit lets users
compare credit cards side by side and apply online.
