Posted by admin on Aug 30, 2010 in Articles | 0 comments
Virtually every bank or lending institution in the world offers credit cards as one of their many services. But banks, like any business, are in it for the profits. So how do banks benefit from offering you a credit card? From the high interest for the high risk clients to no or low interest credit cards, there is more to the story than meets the eye.
How Credit Card Distributors Make Money
There are two main methods that a credit card distributor makes money. The first, and most obvious, is through interest that is charged on any unpaid balance.
If you think about what a credit card is — a revolving line of credit — you’ll realize that what the distributing bank is doing is essentially pre-approving you for an unsecured loan amount equal to your credit line.
Unlike a conventional loan, you don’t need to provide a reason for the loan nor do you need to provide collateral. And unlike most loans, you can pay a portion of the “loan” off and instantly borrow that amount again if you so desire it.
But like a conventional loan, you pay interest on any amount of the unpaid credit. That interest can be viewed as the equivalent of a markup on a product. In essence, the bank is selling you, let’s say $5,000. That $5,000 costs the bank exactly that amount. So to make money on it, they “mark it up” via interest.
Each day that the loan remains unpaid, you are charged interest at a predetermined rate. For example, a credit card with $5,000 charged to it that has an interest rate of 17 percent will cost you about $2.33 after one day. Now you owe $5,002.33. You are now being charged 17 percent on the increased balance, so the second day you’ll owe a little more.
By transferring a $5,000 balance to a low interest credit card with a 3 percent interest rate, your first day’s charge would be cut down to a measly $0.41. Over the period of a month — the amount of time that typically passes between payments — the savings is much larger. Over the period of time it takes to pay off the entire balance, the savings becomes much more significant.
So why would a bank offer you such a low interest rate on a credit card if it cuts into their profits so much?
There is a second method that a credit card distributor utilizes to make money on credit cards, and that is through a fee that is charged to merchants who accept credit card payments. Merchants pay a processing fee to the various credit card companies for the right to accept credits cards. Part of this fee goes to the distributing bank. In essence, the more you use your credit card, the more money the bank makes.
If you show a record of always paying your bills on time (thus improving your credit score) and use your credit card often, then most banks are willing to give you a lower rate in order to prevent you from transferring the balance to a competing bank.
Having a high credit score gives you the power to demand low interest credit cards, which in turn can save you untold amounts of money. If you are a responsible credit card user, ask your bank to lower your rate. If they refuse, start shopping for a low interest credit card elsewhere.
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Posted by admin on Aug 24, 2010 in Articles | 0 comments
Low interest credit cards are always in high demand and currently credit card providers have provided a wide variety of low interest and 0% Annual Percentage Rate offers to keep pace within the strong competition in the card market. Some retailers are offering 0% APR credit cards, which include purchase rebates or discounts.
These cards are especially good for people who want or have to carry their monthly balance. It can also reduce your interest payments by hundreds of dollars per month to maybe thousands over a year’s time, and are therefore a good way of settling credit card debts. A major portion of the amount paid is applied to the principal thereby reducing debts more quickly.
In many ways they are useful if you want to maintain a revolving credit for purchases, cash advances or balance transfers. There is an major advantage for people with good credit, they can easily get good reduced interest rates.
Consumers can get all the convenience of charging items when they need them, and long term, they will pay less interest on those purchases. They are a great way to save money on whatever it is you’re buying, whether you using it to purchase day-to-day necessities, or more expensive items. When you’re paying for a lower interest rate on low interest, you are paying less, and therefore have an advantage. Always keep in mind that when the cards are not used correctly, it can lead to tremendous financial hardship. Through self discipline and living within your means and making your monthly payments you should not encounter any debt problems.
In general, the higher your credit score is, the better chance you have of obtaining a low interest credit card. If you have a good credit rating, you should not have much difficulty qualifying for low interest credit cards.
When you are ready to make that final decision and choose your card, always make sure that you know exactly what you are getting. Having a low interest card can be ideal although they can lead to a downfall if you don’t choose them carefully. If you do not have a low interest credit card in your wallet, you may be missing out on a great way to save yourself hundreds of dollars per year. If you are the type of consumer who carries an outstanding balance month to month, and so many of us do, you will benefit substantially from having low interest credit cards.
Nick Makaryk: Editor, Publisher, and Founder of Best Credit Cards. A Free Consumer Credit Card Comparison site helps consumers find the right credit card while avoiding high interest rates, charges, and no fees. Compare 0% Interest Credit Cards from Visa, Master Cards, Discover, American Express.
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Posted by admin on Aug 21, 2010 in Articles | 0 comments
The low interest credit cards are equivalent to the cheap credit cards that are considered as most famous credit cards due to 0% introductory annual percentage rate. This offer may last 12 months. If you plan to pay full balance off prior to 0% then intro offer expires, and then this tender can be ideal state. If you are carrying balance every month, then low fixed annual percentage rate interest rate may be better option. Selecting 0% intro rate might be the mistake suppose it changes to the high interest charge after promotional offer get expires. This is a cause why it is important to understand what interest rate is after introductory period get expires. The customers who make a decision to go with promotional offer then they can make use of money saved on the interest cost to speed up paying off loan much faster.
The low interest credit cards usually come with the high transfer rates & fees or else interest rates that are higher the prime rate after introductory time. The cash withdrawals might as well have the higher fees. You need to read terms and conditions very carefully. Check all fees & future interest charge prior to signing up. In order to make best use of low interest card, you must make big purchases by using it & pay off balance at time of introductory period. You may finish up paying small interest charge but it will be good than taking store credit for high interest charge. If you have 0% INTEREST rate offer, then you are paying nothing for whole introductory period. By using low interest credit card elegantly during introductory period will definitely assist you save money on large purchases.
What are conditions in order to maintain very low interest?
Even if introductory rate can extend for period of three months to year, interest rate can be hiked rate much superior than prime rate at time of this period. This is usually done seeing you miss out any monthly sum or if you go beyond your credit limit. In order to use benefits of low interest card to maximum, do not let the above situations happen.
Pros & Cons for switching the credit cards
In order to take benefit of low interest cards lots of people switch to credit cards that are rolling on their balances to new ones to keep the interest rates low. And this will absolutely save you money & work your advantage. But switching credit cards may be long process & frequent switching may reflect very badly on your report. Usually you must keep a few long rank accounts with the prime or else low interest charges after introductory period when you switch to other cards.
If you are besieged with the bills and the credit card debts, then why not combine your loans in 1 loan. This can save enormous sum of money on the interest cost. It cam make monthly expenditure more convenient and will alleviate financial problems, which come with having much credit that you cannot afford. This is excellent chance to start process of getting better your credit rank.
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Posted by admin on Aug 18, 2010 in Articles | 0 comments
Some card companies offer low interest credit cards as a means of attracting customers, but believe it or not, these cards aren’t perfect for every person. It comes down to how you use your cards that will determine which is best for you.
Low interest cards may be appropriate for someone who tends to carry a balance from month to month. For these people, the lower interest rate will reduce the amount of finance charges they pay. Keep in mind, however, that some cards charge a very high annual fee in order to cover up for the low interest making it a must for you read disclosures carefully.
Also, the low interest rate may end if you make a late payment, either on the card itself or on another card. This “universal default” clause, where your rate on one card goes up if you’re late on another, unrelated payment, has come under fire recently, but it’s still in many contracts. If you sign one of those contracts, you could find yourself paying the default interest rate—which can be s high as 30%—instead of the advertised low rate. Your only way out at that point may be to close the account and find another low rate card, if you can.
Low rate cards typically do not offer any “extras”, like air miles, cash back, insurance, or rewards points. If those are important to you, you’ll want to compare offers to see which ones provide the features that matter most to you. Affinity cards that can benefit your alma mater or favorite charity are also available. However, you need to check the annual fees as well as the interest rates. Giving to charity while needing a loan to make your credit card payment doesn’t make much sense.
If you don’t carry a balance every month, a low rate card won’t save you much money. You’ll want to compare credit cards on the basis of annual fees, grace period (the time between when the statement is prepared and when the payment is due), affinity, or rewards.
However, there are times when a really low interest card makes sense. Can you open one of these cards and invest the money at a higher rate? Zero-percent cards can make sense in this instance — if the credit card checks are also charged at zero percent. Read the fine print. Purchases or investments made with the checks sent along with your card are not always at the same interest rate as those made with the plastic itself. And don’t forget, you still need to make the minimum monthly payments on time until you cash in your investment and pay off the credit card.
Low interest credit cards can be quite beneficial for two-thirds of Americans who carry balances. They can utilize that low rate to reduce the total interest charges paid while trying to clear the principal balance.
As things like interest rates can change, you have to regularly compare credit cards and look for the one that would suit your present situation. A number of card issuers operate today, and as long as youy payments are on time, you have unlimited options should you want to change.
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Posted by admin on Aug 12, 2010 in Articles | 0 comments
Low Interest credit cards are exactly what their name suggests. They charge low rates of interest (APR). The APR is calculated in the same way as with other credit cards; this facilitates an easy comparison for an individual who is planning to switch over to these cards. Low interest credit cards are favored by individuals who habitually carry their monthly credit card balance forward. Low interest rates can lead to significant savings on financial charges.
For the introductory period, most low interest credit cards offer 0% APR; however, most credit cards offer 0% APR only for select situations such as balance transfers and major purchases. The introductory period offer can be used for consolidating multiple credit cards that charge high rates into a single low APR credit card. This helps people to reduce the financial charges associated with credit card debts and pay off the existing balances quickly. Often, low interest rate credit card companies will waive the balance transfer fee upon a client’s request. Thus, low interest rate cards with rates that can be up to 9 percentage points lower than those of other cards are a great way of saving for those inveterate shoppers who invariably end up with a monthly balance on their credit cards. It is also less taxing to take a cash advance with low interest credit cards. Individuals with poor credit scores may find themselves ineligible for low interest credit cards.
Low interest credit cards may or may not offer other advantages like cash back and travel insurance and should therefore be used with another card that does. This helps a card user to earn benefits from the other card which he may use when he does not intend to keep a balance; for other purchases, the low interest credit card can be used. It is advisable that the oldest extant credit card account that an individual has should not be closed for acquiring a low rate credit card; this is because maintaining credit accounts for long periods reflects well on the credit ratings.
There are several low interest credit cards available in the market. Individuals should do a thorough research to find a card that offers a perfect fit for their needs.
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