Does Low APR Credit Cards Work?
Low APR credit cards are ideal for consumers with good credit histories. These cards often offer a 0% interest introductory offer and a low annual percentage rate (APR). However, they also usually charge a high balance transfer fee and charge an annual membership fee.
Unlike standard credit cards that offer a low interest-free (or almost interest-free) charge for a designated period of time, a low APR credit card offers a low interest rate throughout the life of the card, even without a balance transfer. This means there’s no deadline by which you have to have paid off your balance. If you’re able to pay off your balance in full each month, then you will save money each month on interest costs.
A number of lenders offer low apr credit cards that feature reward programs. In return for transferring your balance to the card, you may be rewarded with points, air miles, cash back, or some other form of incentive. Be careful, however. Many credit card companies that offer these rewards today actually do just as well if not better than traditional credit cards when it comes to earning you rewards. It is critical, therefore, to shop carefully for offers that truly reward you for your spending.
When you look for low interest credit cards, you’ll also want to look for low interest rates. There are many lenders out there offering balance transfers and low interest rates. However, not all of them have low interest rates. Some APR credit cards charge higher interest rates than their counterparts, simply because they are more popular.
One reason why it is important to shop carefully for low interest credit cards is that some balance transfers are likely to be charged fees. Some low interest credit cards offer zero apr balance transfers, but require you to pay an annual fee. Others require long terms before you can transfer your balances, in which case you will likely pay a high interest rate until the introductory period is over. If you can find balance transfers that offer no interest after a certain period of time, it’s probably best to stick with these options.
Another important aspect of low apr credit cards is the type of perks you will receive. Most cards now offer a standard range of benefits. However, there are two key fees that can make a big difference in your bottom line. Balance transfer fees and the annual fee to close a revolving account are two of the most common perks offered by credit card providers. Here are a few key fees to look out for, to help you choose the best deal.
Balance transfer fee: Balance transfers are designed as a way for you to reduce your monthly payments and spread large amounts of debt over a longer period of time. However, when you add up all of your interest charges on a long term basis, you may end up paying more than you would if you were to pay off your low interest credit cards one at a time. The low interest credit cards offer an attractive way to lower your payments but be wary of balance transfer fees that can tack on an annual fee, which can seriously affect your bottom line.
Rewards cards vs. low-interest credit cards: Many people choose to consolidate debt in order to get lower interest rates, but some people prefer to use their cash balances for rewards. In recent years, many credit card providers have begun offering cash back or point system rebates as incentives to get people to switch their balances to low-interest credit cards instead of transferring their balances. This works out to be better for you in the long run because you will be able to pay off your credit card balances faster than if you stayed with your high-interest balances. This also gives you an opportunity to build your rewards history, which has long-term benefits that you can count on.