With the number of low-interest credit card offers out there these days, it can be tough to sort through them all.
Often, the trouble isn’t finding an offer that looks good – plenty of cards offer zero interest for months — it’s just hard to wade through lots of similar-sounding offers to find the best one for you. It doesn’t have to be a headache. When choosing a low-interest credit card, there are a few things to keep in mind:
1. The actual length of the zero or low-APR period:
This is an important one; remember, the good times don’t last, and not all credit cards are the same. Low-interest periods generally stretch from 12 to 18 months, and longer low-interest offers might come with a higher annual fee or other charges. The Federal Reserve has great resources to help you understand some of the finer points of credit card agreements, including a calculator to estimate how long it will take to pay off your balance, depending on your APR, or interest rate.
Keep an eye out for how much notice card companies have to give you before changing your rate. In some cases, it can be as little as 2 weeks before they start charging you more.
Once you’ve figured out when the regular interest rate kicks in, you’ll want to sit down and figure out…
2. The average rate over the time you’ll have the card:
How you’ll use the card can end up being just as important as the length of the low-interest APR period. For example, if you plan to use it for a large one-time purchase, a card with a 0% introductory APR could be just what you need. If you plan to hold onto the card for awhile and carrying a monthly balance, a consistently low interest rate should be a priority.
The interest rate alone never tells the whole story, of course. It’s important to read the fine print so you don’t get surprised by…
3. Late fees and penalty APRs:
Activation fees, cash advance fees, balance transfer fees, conversion fees, closure fees, inactivity fees – pick your poison. There are a bunch of ways that a credit card company can tack penalties onto your bill, so be sure you’re getting a full account of the cost of your credit card before you sign any agreement.
When it comes to low-interest credit cards, one common problem consumers encounter is late fees. If you miss a payment, you can expect to see late fees, but be sure to check how that will affect your low or zero interest rate. Many credit cards boasting low interest have clauses that trigger much higher rates of interests after a missed payment.