Low Interest Credit Cards

Low interest credit cards are the desireable 'holy grail' to those who have credit cards or have had a credit card in the past. Reality is, is a low interest credit card any good? What are the draw backs? Do you end up actually paying more? Lets take a look...

Some credit card providers will entice you into signing up to their credit card by offering a period of low, very low or nil interest. Such common examples include the 0% for twelve months cards, which are prevelant now. The problem is, credit card companies know from their own statistics that credit card users tend to be most conservative in the first year of having their card. After a year or so has gone past, they usually are more inclined to spend, and rack up debt, which in turn generates interest for the card company.

This is, of course not such a good deal for you! The other problem is, that if you go over your limit with the 0% cards, most providers will charge you penalty interest as high as 30%, and charge fees for going over the limit. So, all said and done, you are infact best to avoid these cards in the long term!

Next, is the standard 'low rate' low interest credit cards that crop up from time to time with credit interest of say 10% or 12%, lower than the usual 16% or 18%. Are they a good credit card deal? Well, they can be. Trouble is, they apply to low limits. A limit such as $3000 might have a low rate, but if you increase your limit to say, $10,000 when you get a higher paying job, you might be locked into an interest rate of 20% or higher! Again, read the small print!

Then there is the good old standard rate cards, these are around 16-18% per annum interest, and dont offer much in the way of special deals. I'll tell you why they dont offer as special deals, because the credit card company knows that the cards with 'low' interest offers,will get them the biggest return in the long run. If the normal cards where as profitable, it would be in their interests to promote them, and they would spend their advertising budgets letting us all know about them so we sign upto them.

Always keep a cautious eye when you see that great low interest credit card deal, and try and not be fooled by the glossy appearance-the standard rate credit card is usually the lowest cost for you in the longrun!