subject: Pros And Cons Of Low Interest Credit Cards [print this page] Pros And Cons Of Low Interest Credit Cards
The name might lead many to believe that these low interest credit cards have lower interest rate on outstanding balance beyond the bill payment date than other cards. This is true to some extent but not entirely. In reality, the interest rate also known as APR is of two types, the initial APR and the regular APR. The initial APR is either 0% or very low for many credit cards, while the regular APR is the more nominal rate charged after a fixed time period. The point to consider here for customers is what the time frame of the initial period is.
Types Of Initial Periods
For example, the Capital One Venture rewards Credit card has the initial period lasting up to May 2011, which is one way of specifying the time period. Therefore, the card benefits include no interest rate or 0% APR on all purchases during the time frame which is very good. If you are a customer with a clean credit history and no outstanding debt, you could prefer this card.
Another way of looking at the initial period is by distinguishing between balance transfers and general purchases. Chase Freedom Visa card has 12 months initial period for balance transfer while it is only 6 months for purchases, which is less than that of Venture. However, if you are a customer who has many outstanding debts or unpaid bill amounts on other cards you can transfer all the balance to this card saving interest that is accumulating in other cards due to the outstanding dues. You will now have a 12 month period to pay off those balances without worrying about accumulating interests which are usually high after that period. At least you will get a so called breather.
Another offer present in some low interest credit cards is when the intro period talks about 7- 10 billing cycles which is slightly different way of looking at the whole deal. Customers also need to look at the terms and conditions of these low interest credit cards as they might have a catch or two.
Other Advantages Of Low Interest Credit Cards
Low interest credit cards apart from their zero interest rate in the initial period also sometimes have cash back offers and bonus payment. For example, Chase Freedom offers a bonus of $100 for every $799 of purchase that you do. You must once again check the difference between purchases and balance transfers. Most cards do not include balance transfers at all in these benefits while some cards may give discounts, which means you can actually go one step ahead and reduce your outstanding balance by transferring all dues to one credit card deals.
Cons Of Low Interest Credit Cards
These cards have a regular rate which is higher than you would come to expect from standard credit cards. This means after transferring all your outstanding balances to one card you must be careful not to let those dues stay unpaid beyond the initial period. Some credit cards in fact have variable interest rates, depending on purchases which mean you might have to pay extra interest for amounts accrued for balance transfers.
