Low APR Credit Cards

When combining credit cards and annual percentage rates, the best formula results in low APR credit cards. Even if you have every intention of paying the card balance off each month, circumstances may result in carryover for a month or more: having a low APR credit card makes paying the extra cost a little easier to handle.

How Low They Will Go for How Long

The fact is that many low APR credit cards only have an appealing interest rate for a limited time. Usually companies use an extremely low APR to attract new customers, especially those interested in making balance transfers. After all, why pay 12 percent interest or more on a standing balance of $3,000 for example, when another company is offering 3 percent interest for six months to transfer that balance?

If indeed a cardholder can

• pay the balance off in six months and, more importantly,
• not use the card at all during that time;

that’s an approximate savings $90 to $270 in interest. So even though such a card may be a promotional offer, it’s still worth considering.

Lenders traditionally offer extremely low APRs for six-to-15 months before returning to the standard 10-18 percent APR. So consider your payment methods before turning to a low APR credit card.

If you’re obtaining a card for the first time, read the fine print. Sometimes certain low APR credit cards are not available to new customers without a balance transfer. Other lenders offer an APR on purchases as low as 0 percent but only for one year, and again, the APR rises to the standard rate.

These cards are still valid options, but one that requires cardholder discipline to extract the best advantage.

Don’t Be Taken In by the Extras

Try not to be dazzled by all the card incentives – remember, the APR is supposed to be what you’re after, and the additional sparkly shiny offers are rewards for smart credit usage. Very rarely do lenders offer rewards on the amount of a balance held on a card – just on the purchases made.

So if you think you’ll earn frequent flier miles for keeping a high balance on your credit card and on the interest you pay, it’s time to rethink your strategy.

Make Low APR Credit Cards Work for You

• If your intent is to pay the balance of your credit card off each month, congratulations! That’s a smart money management technique. So the low APR credit card most in line with your plan may not be the “0-to-4 percent for a limited time” type, but rather a more fixed APR that, while 10-15 percent, may not have an impact on you at all and is still relatively low if you do have to carryover a balance for a short time.

• If you’re trying to get your credit cards under control, a balance transfer as outlined above can really put your new financial objectives in motion. So shrewdly analyze your ability to pay off debt, then examine many of the introductory offers for the lowest possible APR for the longest period of time, in addition to the parameters of the APR hike at the end of the promotional period.

• Card hopping from one low APR credit card to another can not only be damaging to your credit rating, but also limit your future options. Better to stick with one card and adjust your spending habits and eliminate the debt.

Low APR Offers on Cash Advances

Two words: bad idea.

Financial experts recommend that only in emergency situations should someone use cash advances from credit cards. Traditionally, the APR is higher on credit card cash advances than on general purchases, but sometimes less than reputable advertising touts a low APR on cash advances as an enticement.

As Obi Wan Kenobi said, this is not the APR you’re looking for. Stick with finding a low APR first for purchases and then, if necessary, balance transfers.

Take Your Time and Find What Works

Researching a new financial method takes diligence and time, but remember: a credit card is a tool for you to accomplish certain money management objectives. When you’re debt free and knowledge wealthy, those extra phone calls or mouse clicks it took to find the best low APR credit cards will make all the difference.
[tag]APR,credit-card[/tag]