What to look for in a low interest credit card

Many borrowers are looking for lower interest credit cards in order to reduce out goings.  This is a good idea, but it pays to be aware of how low interest cards work.

Although it seems obvious that a borrower should look for the lowest interest credit card that is available, there are other things to consider.  There is the time that the offer lasts, whether the low interest is affecting the particular balance or whether there are fees that cancel out some or all of the credit card saving.

The length of the low interest period is very important.  Many credit cards offer very low interest for a short period of time, usually between three and fifteen months.  These are called introductory periods and they are usually advertised as being for a short period, although rarely as prominently as the interest rate is charged.

Some card users will go from low interest offer to low interest offer, ensuring a low interest rate for an extended period of time on a large loan.  Some credit card users take this a step further by going for zero interest rate credit card introductory offers.  This sounds tempting but it needs to be strongly organized and there needs to be a good amount of self-discipline.  If the card holder is likely to stay on the same card then it is a good idea to look for a permanently low card.

Borrowers looking for a good credit card deal should be aware that different balances are often charged different rates according to where the credit card debt came from.  This means that a credit card balance charged on spending can be higher than the credit card balance that arose from spending on the card.  This will mean that if the card holder is looking to mainly spend on the card then there will be little use for a card that has a cheap rate for balance transfers but a higher rate for spending on the card.

A borrower who is looking for low interest rates should take into account the fees that will be charged.  It used to be quite common for a structure of high fees, either set up or annual fees.  This can still happen, although it is rarer than it used to be.  However a quick calculation should be made in order to see whether this will affect the overall cost.