Low Interest Credit Cards
Just about every credit card ad you read touts its wares as
"low interest credit cards." To determine whether this is
accurate or not, you're going to have to look past the headline
and into the fine print for the details. Here is some basic
interest rate information to help you determine if that "low
interest credit cards" are really "high interest credit traps."
How To Find Low Interest 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.
Visit www.amex-visa-mastercard.c
om to review a listing of credit card offers that truly are
low interest.
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%.
With a little effort, you can find a great low interest credit
card that is right for you.
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