At first glance, a good interest rate is about finding the lowest number. Focusing on this strategy alone isn’t a foregone conclusion. Appearances are deceiving. The best interest rates come from continued research, which includes looking past the obvious.
Ignore Trial Offers
Just because interest rates appear low doesn’t mean the deal is permanent. This is an enticing offer to lure customers to the credit card. The rate raises exponentially after it’s over. Suddenly trial offers (i.e., 0% promotional financing, or 7% interest rate for 12 months) aren’t promising. The fine print on endless pages explaining the terms, agreement, and privacy rights related to the credit card should not end up in the trash or stuffed in your drawer. Not completely understanding the complete agreement could lead to misunderstandings and contentious situations in the long term. Only agree to trial offers when you’re certain about the advantages and consequences of accepting it.
One string attached is the supplemental fees associated with the account. From balance transfer and late fees to customer service and cash advance fees, it’s easy to lose track of all fees associated with the card and the card company. The agreement also provides some insight about how customers activate those fees. Customers can then prepare for those impending charges or avoid them altogether.
The main fee to worry about is the annual percentage fee. You must pay this percentage yearly regardless of balance. Aim for credit cards that carry no annual percentage fee regardless of balance.
A good credit score is a bargaining chip toward lower interest rates. The credit score shows customers the qualifying credit cards. The qualifying credit cards are the most likely (not guaranteed) cards to gain approval from credit card companies.
Attached to credit score is credit history. The score signifies a piece of your credit record. The credit history highlights how the customer got there in detail. Companies will look at this before finalizing their decision. Tackle questionable incidents in the credit history before applying.
Credit Card Use
When it comes to payment, a credit card’s purpose requires some thought. Will the card company receive their money in full or through the minimum payment? Companies don’t benefit from customers paying the full balance because there’s no balance left to accrue. A low-interest rate works for those moments where you need to carry a balance. Customers who prefer to carry a balance will receive interest attached to the unpaid balance. It lowers the money paid to companies.
These factors go beyond staring at the interest rate percentage. Credit card companies are risking their reputation to trust you with their card. These factors above prove they won’t hand their trust to just anyone.