Credit cards are a charm to use. All you need to do is to flash that card for your favorite services and shop your way around the market. However, do you consider the interest rate you have to pay on the balance? Credit card debt is one of the major personal finance problems faced by the average American consumer. Your credit card interest influences the amount of interest you pay every month. It has a direct impact on your monthly expenses.
What do you know about the low interest credit cards? Low interest credit cards offer cheap personal finance for your regular expenses. These cards offer several benefits in addition to the low interest finance. Let us find out some important benefits of low interest credit cards.
How low interest credit cards can help your personal finance?
- Introductory interest free period: It is easy to find a low interest credit card with an interest free introductory offer. In most of the cases, this period stands between 50 to 60 days. It means you can make the repayments without any interest at all during the grace period.
- Low interest rate can help reducing your financial burden: Most of the people are unaware of the fact that credit card interest rates are calculated on a daily basis and charged every month. Higher interest rate credit cards (16%) might cause extra financial burden with the compound interest being calculated on your current debt. You can save money by shifting to a low interest credit card (10% interest) along with the introductory offer and a low rate for balance transfer. You can cut down your debt quickly.
- Low interest rates: As the name suggests, low interest credit cards charge a lower interest rate. Having a low interest credit card with 11.9% interest rate would require you to pay $4.95 on every $500 as compared to the $9.13 for regular credit cards (21.9%). A higher interest rate means that you would be required to pay higher personal finance charges. Many finance experts advise consumers to lower their credit card usage and prefer debit cards or cash for the payment.
- Low minimum payment: Most of the low interest credit cards have comparatively lower minimum payment. Minimum payments depend upon your outstanding debt and interest rates. Generally, minimum payment is calculated as a specific percentage of pending payment along with the finance charges. Therefore, a higher interest rate would affect your minimum payment amount.
It takes time and effort to improve your financial status. Low interest credit cards can be an effective beginning to your financial transformation.