Lowest Credit Card Rates

By: Anne Durrell

When it comes to choosing the right credit card facility, most people aim at applying for the lowest credit card rates. Banks and lenders are advertising insanely low rates, even as low as 0% in some cases, so this becomes very tempting for many customers.

However, there is a lot more to think about when it comes to credit accounts that run a bit deeper than just searching for the lowest credit card rates.

Are Lowest Credit Card Rates Better?

The current spate of lenders advertising 0% balance transfers on many credit card accounts sounds like the ideal way to get out of paying high interest. What the lenders don't tell you is that these accounts often have plenty of hidden fees and charges they don't advertise so openly.

The most obvious is the fact that the 0% offer only lasts a limited time. When this expires, your interest rate often reverts to a much higher rate. If you're carrying a balance when this happens, you could find you're paying more than you need to.

How Do Banks Profit On Lowest Credit Card Rates?

Banks are in business to make themselves a profit. When they begin advertising the lowest credit card rates, you know something else is lurking under the surface. Offering you a credit card balance transfer at no interest charges means they know they're going to make a profit from you somewhere else.

For example, if you have a current credit card being charged at 15% with another lender and you want to access the 0% interest offer on balance transfers, then you'll refinance your entire balance to the new lender.

On top of your current balance, they'll add an application fee and a balance transfer fee, both of which increase the balance you had before. They may also charge the annual fee up front and add this to your balance too.

So now your balance is higher than it was, but you're paying the lowest credit card rates you could find. With your new increased balance and your low rates, you would be thinking it will be easier to pay off your balance and reduce your debt, right?

The truth is, many customers find that they now have a new credit card account that has a balance that is the same as their new limit. This means they can't charge anything to it. They also learn quickly that their old credit card is still open and the balance has been cleared

The temptation to go out and keep spending on the old account is often so high that it's irresistible. If you give in to this temptation, you'll soon find that you have your old credit card carrying a high balance again at high interest rates and you'll have your new lowest credit card rate account also with a high balance, but low interest. You'll be paying off two accounts instead of one.

What's the Catch With Lowest Credit Card Rates?

Lenders often reserve their lowest credit card rates for customers with excellent credit. If your credit is less than excellent, then you could find yourself paying far more interest than you first thought. Always double check the offer you're applying for and be sure to read the fine print to understand exactly what you're being charged.

Lowest Credit Card Rates

lowest credit card interest rates

Lowest Credit Card Rates

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