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Credit cards with low interest rates

Nobody wants to pay more, so when we shop around for a new credit card we usually look for the lowest interest rates available. A recent study shows that low interest is the first reason to apply for a particular credit card for most of the people.  If you lower interest on your credit card or transfer your balance to another card, a lower APR could save your big money on a long term. You can focus more on the paying off the principal than the interest and you debt could be paid off faster.

How to reduce you current rate

If you aim to lower interest rate on your credit card, you should check it with your credit card company or a bank, since the majority of them don’t propose reducing APR on existing cards. Nevertheless, sometimes companies offer this option to their most valuable customers in order to encourage them to spend more.

Whether you wish to switch to another company or not, the following trick works sometimes to get your current APR reduced. Call your bank and let them know that you’ve received a couple of more attractive offers and considering to switch. If you are a good and loyal customer, the company will try to do its best to keep you. Therefore, there is a good chance that they can offer you a reduced APR if the clerk has this option in his arsenal. If the person who you are talking to cannotmake the right decision, you can ask for a manager. Sometimes sales departments and customer service departments have different lists of options to propose, so you can try talking to both.

How to check if the offer is good

0% APR

You should know that APR is your base annual interest rate and additional fees and charges may increase your effective rate significantly. You should also know that even with the same card there is a range of APR for different customers – people with lower credit score most likely will pay a higher interest – e.g. APR can be in a range of 11.99% to 19.99% based on your credit score.  So the first step is to know your credit score and understand if you can get approved for a particular credit card and then you can estimate your APR bracket based on your credit score.

Another thing you should know – low or even 0% APR is not usually combined together with good cash back, air miles or rewards offers. Most of the good cash back cards have an average to high APR, so it doesn’t make any sense for you to collect cash back and loose even more money on higher APR if you carry a balance on you card. For example Capital One credit cards for rebuilding and average credit (Platinum for Newcomers, Cash Rewards, Classic Platinum) are offering 19.8% up to 24.9% APR. Cash back options for this cards are limited to mediocre 1%. Credit cards for excellent credit have much better 10.9%-20.9% APR based on the score and offer better cash back and miles options.

Usually the lowest APR offers are based on the variable APR -which is calculated based on the Prime Rate + X%. That can change with Prime Rate fluctuations in opposite to a fixed rate that can not change over time.

You should understand the difference between APR for purchases, for balance transfer and for cash advance. The best card will be the one that offers lowest APR for both balance transfer and purchases for the longer period of time. The best offers have usually 0% APR on balance transfer and purchases for the first 12, 15 or 18 month. To benefit most from your credit card you should focus on paying off your balance in full during that introductory period. If you plan a balance transfer it is good to know the balance transfer fee (e.g. fixed 3% on Discover Citi and Chase cards, no fee on most Capital One cards). Regular APR can also be changed to a much higher penalty rate if you fail to make a minimum payment on time. Penalty APR usually is around 30% and can also be combined with different penalty fees.

Consider Discover More card that is offering 0% APR for first 15 months (10.99%-19.99% after), Chase Slate or Chase Freedom cards that offer 0% rate for 15 month, Citi Simplicity card with 18 month 0%APR and 12.99%-21.99% after that.

While zero percent APR offers and cash back programs can be very appealing and seem beneficial, the best thing in a long run is to have the lowest fixed rate on the credit card. It’s a good idea to choose 0% balance transfer card to switch to. But these offers usually require good to excellent credit score. Make sure that rates after the intro period will not be higher than you current ones. Calculate an effective APR which is the actual cost of your money that includes APR, annual fees and additional charges.

Regardless of which card you will choose on time bill payments will help you to maintain your credit history and avoid debts growing. It is important to read the agreement with all fine prints to make sure that there is no strings attached.


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