Okay, so you’ve found the best low APR credit card and now you’re ready to submit your application. How can you make the most out of your low interest rate card? In this article, let’s discuss some tips on how you can enjoy the best benefit of what your low interest card has to offer.
Keep your interest low. You may notice that the ads often say “AS LOW AS ___ APR”. After the zero % introductory period, there are credit cards that maintain a low interest offer for their clients. Nevertheless, enjoying the lowest rate possible actually depends on how well you handle your account. If you’re consistent with your payments, you should be able to enjoy the lowest rate offer by your credit card. On the contrary, late payments and maximizing your credit limit may move your credit card company to raise your APR higher.
Take advantage of the grace period. The best low APR cards in the market must also come with a sufficient grace period. Unfortunately, many cardholders don’t even make use this provision. Instead, they choose to submit only the minimum due payment and carry their balance from one month to the next. But remember that paying off your entire balance within the grace period enables you to save from at least 8% to 11% from your charges. Even with a low APR card, why pay the interest, if you can avoid it by paying off your entire balance?
Understand how the APR is calculated. What kind of interest does your credit card have? Is it fixed or variable? Take note that a variable-rate can change at any time depending on the Prime Rate. This means, your initial low APR could rise unexpectedly if the Prime Rate rises.
Don’t take out cash advances. Avoid using this particular feature from your low APR credit card. Bear in mind that cash advances are not covered by the grace period. Thus, you will be charged with APR as soon as you’ve taken out your cash. Some credit cards may also impose a different APR for cash advances than the APR for purchases and balance transfers.
Don’t charge more than what you can afford. Even if your card has the lowest interest rate, charging more than what your income permits puts you at risk of bad debt. A low interest is not an excuse for splurging or overspending. Before charging anything on your card, consider 3 things: first if you can pay off your charges on time, if that purchase is really important and if it would be better to pay it in cash.
Understand your credit card’s Terms & Conditions. Before even signing up or submitting your application, make sure that you are clear about your chosen card’s Terms and Conditions. Never sign up for a card on the basis of the low APR alone. See to it that there are no hidden costs or vague clauses in your contract.