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Low Interest Credit Cards

Low Interest Credit Cards: The pros and cons
In today’s world of high expenses and an increased cost of living, the prospect of low interest credit cards can be very tempting. After all, these signify lesser credit card expenses, more savings and increased purchases on the card. However, think again – as you may be in for a rude awakening once you find out the hidden costs associated.

Types of interest that can be charged
In any credit card, there is always the standard set of interest rates that can be charged. Therefore, no matter what the deal is, it’s essential to know what can have an interest associated and what cannot.

Annual Purchase Rate (APR): This is the interest rate that gets charged on all your purchases on the credit card.
Balance Transfer Rate (BT): This is the interest rate charged on all balances that get transferred to a new card. This method is used by most people to consolidate their existing debts. Even loans can be transferred to a new credit card through Balance Transfer schemes.
Cash advance rate: This is the interest rate charged whenever you happen to take a cash advance through your credit card. However, be warned, as this interest rate is exorbitantly high – almost 20 to 25%

What low interest credit cards really mean
Ever wished that all your debts would vanish away? Having too many credit cards can really place people in a difficult financial situation. This is especially true if they happen to have too many outstanding balances. Going for a Balance Transfer can help in such situations. A balance transfer basically means that you transfer all your outstanding balances from existing credit cards and loans, to a new credit card that is offering a low rate.

You might think it’s going to save you money, right? After all, you’re consolidating your debts to a card that’s offering a lower rate. In reality you’re not really saving money. Not if you read the fine print of the credit card material. It will very clearly state that this promotional low balance transfer rate is only for certain duration (may be 6 to 12 months), after which it goes back to the default rate. This default rate is unusually high (sometimes even as high as 19 %!). The terms and conditions will also state that just in case you happen to miss a payment or make less than the minimum payment, even then the rate goes back to the default. Shocking, isn’t it? It’s almost as if they’re penalizing you for almost anything you do.

The same goes for a so-called zero Annual Purchase Rate. This usually lasts for up to a year, although some credit cards provide this promotional rate for a shorter duration. Even in this case, having a zero rate doesn’t mean its all good times ahead. Just in case you miss a payment or pay lesser than the minimum amount due, you’re in for trouble. The APR is going to skyrocket to the original default rate and you’ll be left paying high amounts on all your purchases!

Cash advance rate is the most dangerous because there’s no grace period, the interest rate is abnormally high and the worst part is banks will always coax you into going for a cash advance. It’s almost like a trap they want you to fall into!

For every deal there's a "catch"
Before you sign on the dotted line, make sure to read all the terms and conditions of the credit card very carefully. As they say ‘nothing’s free in this world’, so also is the case with credit cards. Make sure to check in which cases the rate goes back to default, how long is the introductory offer and most of all what’s the default rate. Having answers to these questions can mean never having to fall prey to low interest credit cards.

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CREDIT CARD TYPES

Choosing the credit card that's best for your needs and situation starts with knowing what options are available to you. The following list details the most common credit cards available:

	Balance transfer credit cards - Balance transfers are a way of transferring outstanding balances from existing credit cards to another card that offers a lower interest rate. For example, if you your have a high annual percentage rate (APR) credit card with a significant outstanding balance, you can transfer the balance to another card with a lower rate or even one offer zero interest. Typically these cards offer low balance transfer rates for a specified period of time allowing you to save hundreds (or even thousands) of dollars in monthly interest charges.
	Low-interest credit cards - These cards offer a low introductory annual percentage rate (APR) for a promotional period, after which they can change to a higher rate or a fixed-rate. If you plan on making a large purchase, it's a good idea to pick up a low-interest credit card to take advantage of the savings on interest during the introductory period.
	Cash rebate credit cards - Cash rebate cards accumulate "points" for1 every purchase you make using the card. Most cash reward cards award a point based off 1% of the purchase total, excluding interest and finance charges. For example, if you make a purchase for $1,000 the credit card will award you with 10 points (or, $10.00). These cards are great for loyal customers who make payments on-time every month.
	Reward credit cards - Reward credit cards are similar to cash rebate credit cards, but differ in that they offer various forms of "rewards" for the purchases you make. For example, you can accumulate rewards for frequent-flyer-miles, free magazine subscriptions, and even hotel and travel discounts. Ideal for those who enjoy getting something for free from their credit cards.
	Travel credit cards - Travel credit cards are ideal for the frequent flyer who travels the globe on a frequent basis. These cards accumulate significant reward points every time you make a travel-related purchase. You can gain discounted airline tickets, rent cards for free, and even get discounted hotel rates!
	Pre-paid credit cards - Pre-paid credit cards are ideal for those who are on a tight budget and don't want to fall prey to the financial pitfalls associated with standard credit cards. They work similar to gift certificates or debit cards. You deposit money into the card and then use the card to make purchases as you would a typical credit card.
	Secured credit cards - Secured credit cards are ideal for people with poor or no credit. They work on a collateral system, where you put up something of value against the debt on the card.