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Comparing low interest credit card offers

[Tuesday, November 2nd, 2010]

Credit card balances are normally carried forward month after month by some cardholders, but with the high interest rates it is more sensible to look for ways to reduce interest rates each month while carrying balances forward.

Cardholders basically have two choices while carrying balances forward. The first being opting for a 0 APR balance transfer or alternatively applying for a credit card with low interest rates. In general, cards with a 0% APR only makes sense when one can pay off the balance in full before the expiry of the promotional offers as cards charge a high interest rate after offer expires and the rates might shoot up to a whopping 22.99%. For each balance transfer a fee of around 3%-5% would be charged and the cardholder has to qualify to make the balance transfer.

A better option in such cases would be to opt for a card with low interest rates instead of the 0 APR offers. Even then the so-called low interest credit cards are not loaded with very good deals as the interest charged by the major issuers can go anywhere from 12.99% to about 14.99% (variable). However, with a little bit of snooping around one can find low interest cards as there are still some smaller banks that offer good deals with interest rates in the range of 7.99% to 9.99%.

There are few points to consider while opting for a low interest credit card:

• Firstly, arrive at the credit score that is required to qualify for the card. Most of these cards required a good or excellent score (FICO score estimator could be used). If the score is not good enough to qualify then one should take immediate measures to improve the score.
• Secondly, there are banks that start with a very small credit line. One has to confirm with the issuer about the starting credit limit. It is always advisable to apply for a credit card with one or at the most two issuers at a time as the credit scores might get affected if one gives the impression of shopping around.
• Some cards offer low introductory rates and allow balance transfers for about 36 months with an APR of 7.49% variable.
• Some issuers would require proof of income as well as a credit history that is free of any delinquencies, delayed payments, or bankruptcy etc.
• Lastly, one has to go through the terms and conditions and read through the fine print with regard to the penalty, late payment charges etc in order to avoid embarrassing situations in the future.

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