There are a lot of offers in the credit card sector at the moment that may be worth looking at when applying for a new card. Getting a deal on any kind of financial product or service can save a consumer money -- whether they pay off their credit card in full every month or whether they carry a balance over month on month. So what should you consider?
A brief explanation as to how credit card offers work
If a consumer doesn't pay off their credit card balance every month when their bill comes in then the amount that they owe will have interest added to it. Credit card spending is, after all, simply a way of borrowing money. The interest charged here will be based on the card company's APR for the card in question. The APR (Annual Percentage Rate) is the percentage of interest that is charged over the course of a year.
Given that APRs can vary widely in the sector it makes sense for any consumer to look for a low APR deal -- either for the life of their card or as an introductory offer. The most common types of deals here are low interest rate and zero interest rate deals.
In some cases, as with life of balance deals, the card company will lower their standard APR to a preferential interest rate for 'life'. In others the lowered rate will be offered for a set period of time -- i.e. for three, six, nine, twelve or eighteen months. Once the deal is done here the card provider will start charging their standard APR again.
Low interest rate introductory deals give the card user access to a special rate of interest for a set period of time. Some deals here are known as 0% deals as they charge no interest on new spending for as long as the deal lasts. These kinds of rates are often also applied to balance transfer deals where the consumer switches the balance from one or more cards to another. A low rate or 0% deal would charge a lower rate/no interest on the transferred balance during the offer period. Sometimes, this deal is also given for new spending on the card.
Be aware that no credit card deal will come without conditions -- make sure to read the small print before applying for any card. You will, for example, need to check the APR that will be charged once the deal has finished. A 0% balance transfer deal with a high subsequent APR will not necessarily save money in the long run. And, a balance transfer fee may be charged to set up this particular deal -- this will generally be a percentage of the monies to be switched to the new card.
Conclusion
Some people are quite surprised to find that they are turned down for a credit card application for no apparent reason. In order to avoid this consumers need to practise good financial management. Avoid spending more than you can afford on a credit card so as not to get into financial difficulties. It's better to ask for a lower credit limit and to spend within your disposable income.
Always make sure to make payments for all financial products on time every month and do not miss payments. If this happens it will turn up on your credit record and could negatively affect your credit score. This score may be used by a credit card company when they look at your application. Another negative mark may be given if a consumer applies for too many financial products in a short space of time.
Roger Jefferson is an independent author with a focus on consumer, finance and business matters.
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