Credit cards accrue interest with time, just like the funds in your savings account do. Only that with plastic, you are on the losing end. So if you’re suffering compounding charges due to the balances you accumulate per month, then shifting to a low-interest credit card is an excellent idea.
Most of the reward cards we use carry 19.99% in interest rates for all purchases we make, and more for any cash advances we take. In comparison, low-interest cards will charge only a fraction of the above percentage, most times falling between 8.99 percent and 14.99 percent. And for the icing on the cake, we have the zero-interest credit cards that charge no interest.
Here are three reasons these types of cards mean a lot:
You save a significant amount on interest
It goes without mentioning that you’ll save a lump sum in the long run if you operate a credit card with a lower interest rate. Paying less in interest allows you the financial space to clear away your debts because much of your finances go towards settling your principal balance, instead of paying off interest charges. Remember, interest undervalues the rewards from your credit card, so you are better off with credit cards that have no interest rates if your pocket isn’t fat enough to clear bills in full every month.
Hassle-free application & approval
If your credit card debt is huge, you would want to shift to a “balance transfer credit card” which allows up to Zero percent interest rates on transfers you make in the first 6-12 months. Nevertheless, you won’t easily qualify for such cards because issuers only allow good credit performers to enjoy the 0% rate.
But in general, those whose credit scores are not up to standard are more likely to qualify for these low-interest cards which come with an added advantage – you get a fair interest rate on your balance transfers. What’s more, these card types have the lowest minimum income requirement which means you can get credit even on a small salary.
A perfect way to effortlessly boost your credit score
Clearing all your bills, including the credit card bill is the easiest way to keep a desirable credit score, or boost up a poor one. Because your payment history makes up almost 35 percent of the calculations that result in your credit score, failure to toe the line worsens your FICO results.
Again, not settling all your balances means that you must make the minimum per-month payment amount avowed on your bill. A low-interest rate card means a lower minimum payment per month.
Cardholders who find it difficult to make timely regular payments will also suffer fewer penalties when they miss on some payments with their low-interest cards. While regular cards may have your interest rate tripled or raised higher for skipping payments, the worst a low-interest card can do is double it.
The bottom line
While interest seems like an unavoidable credit card charge, you can have your way around it by applying for zero and low-interest credit so you can keep your debts in check by reducing the amount you throw on per-month interest charges.