When bill-paying time comes each month, low-interest credit cards stand out from all the rest. The bills for low-interest credit cards look much more like the cost of what you originally bought, rather than a list of high interest charges stacked on top of your purchases. Will you qualify for low-interest credit cards? How can you get one? We have gathered together a little information on low-interest credit cards to help you along the way.
Getting a Card
Low-interest credit cards can come from a number of credit card companies. Of course, the major credit card companies, Visa, MasterCard and American Express have low-interest credit cards; but don’t forget to check out low-interest credit cards offered through Discover, the various versions of Chase, your local financial institution and even smaller credit card companies.
In order to apply for low-interest credit cards, you must be at least 18 years old and a United States Citizen or legal alien with a permanent resident status, and you must have a regular income and basically impeccable credit.
The credit card company will look at your credit report, give you a score and decide what kind of risk you will be for their company and their credit card. This score and their judgment will determine the type of card, interest rate and credit line they will offer to you.
Why Low-interest Credit Cards?
Of course, the obvious benefit of low-interest credit cards is the low interest rate on your purchases. Instead of paying 18 percent or more on your purchases each month, you can pay 7 or 8 percent.
Low-interest credit cards reward people who have developed a good credit record. Because you can prove your dependability to the credit card company by your credit rating, the credit card company sees you as a lower risk to their company. They return this feeling of security you bring to them in the form of lower interest rates for your benefit.
Why NOT Low-interest Credit Cards?
Low-interest credit cards are designed for those of you who carry a small balance on your card each month. With the low interest, the balance does not grow astronomically and your card will save you a significant amount of money. You will also save quite a bit of money on balance transfers to low-interest credit cards.
If you are someone who pays your balance off each month, you really do not need low-interest credit cards. If you never carry over a balance, you will never pay interest, so it doesn’t matter how high or low your interest rate is. You should look into rewards cards that pay you back in merchandise, airline miles, restaurant meals or even cash.
If You Get Turned Down
If you get turned down for low-interest credit cards, it is your right through the Fair Credit Reporting Act to find out why. Ask for answers. It could be something as simple as your income did not meet their criteria. You are also entitled to a free copy of your credit report at that time.
If you are turned down for low-interest credit cards because your credit rating is too low, look into higher interest cards or secured credit cards and pay your bills on time to begin building your credit again. However, each application shows as an inquiry on your credit report and stays for one year. If you have more than 10 inquiries in a six-month time frame, it does not look good and you will have difficulty getting any credit at all.
By D. Blair Thompson