Low Interest Rate Credit Cards
There are many credit card offers that advertise a low interest
rate but not all of them are necessarily as good of a deal that
they want you to believe. You will have to read the fine print
to determine the legitimacy of the credit card offer. Here is
some basic interest rate information to help you determine if
those "low
interest rate credit cards" are really a "high interest
credit trap."
For a reliable listing of low interest rate credit card offers
visit www.amex-visa-mastercard.c
om
Finding the True Low Interest Rate Credit Cards
Be aware
that interest rates are variable. Credit card rates are set by
adding a spread, or margin, to a base rate. Your base rate is
often a widely used index rate, which is almost always a rate
that changes periodically, without warning and for no reason.
The spread that is added to calculate your rate depends on your
credit history. If you pay your bills consistently and on time,
the spread may be as few as 2 or 3 percentage points. If your
credit history reveals that you make late payments, or have too
much debt, the spread may be 5 or 6 percentage points or more.
The advertised rate on a credit card is often the card's simple
interest rate. The effective interest rate, however, is your
true cost of borrowing and includes annual fees you pay to use
the card. The compounded interest rate is a better barometer of
your effective interest rate. For example, if your card has a
rate of 12%, your monthly rate would be 1%. Because credit card
interest is compounded monthly, the effective annual interest
rate on a 12% simple-rate card is 12.68%. Understanding how the
interest rate on a credit card works can save you from
overpaying in interest and fees.
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