How to Find Low Credit Card Rates?
55If you regularly use your credit card but rarely or never pay off the full debt each month, the APR is extremely important. You need a card with a 0 per cent introductory rate of interest or a low long-term standard rate.
Sourcing good introductory rates Many card providers offer 0 per cent introductory deals to new customers for a period of 5 to 12 months. This rate usually applies to new purchases, balance transfers (moving an existing balance from one card to another, in which case a transfer fee will be charged), or both. It may even apply to cash advances, although usually this isn't the case. Find out exactly what charges apply to your card: Claiming ignorance when you've been stung with outrageous interest charges won't change the situation. The advantage of a 0 per cent deal is that it can help you clear or reduce a large outstanding debt. For example: If you have a £2,000 balance on a card with a standard APR of 14.9 per cent, you may be able to pay only the interest on your debt each month. But if you transfer to a card offering 0 per cent for nine months, you can now clear some of the balance. You may have to pay a balance transfer fee of, say, 2.5 per cent, which amounts to £50. However, if you repay £70 a month (and don't spend any more), you can reduce your outstanding balance by £630 and save £202.55 in interest during this period. Once the offer ends, switch the remaining balance to a card offering a similar deal and continue until the debt is cleared. If you continue spending on your card, you have to pay back the money eventually - it isn't free. So resist the temptation to run up huge debts simply because you aren't being charged any interest initially. This won't always be the case.
When the introductory period ends, the card reverts to the issuer's standard rate. This could be quite a lot higher than 0 per cent and if you have run up a sizeable balance, you could be stung for quite a hefty interest bill. To get round this, find another card offering 0 per cent on balance transfers and switch your debt to this new card. If the issuer charges 0 per cent on balance transfers but not on new purchases, be wary of spending on the card or you could run up a lot of interest - at a rather higher rate than 0 per cent. Not only that but if you make any payments, the cheaper debt is usually cleared first - in this case, your transferred debt at 0 per cent - not the higher rate on new purchases. You can own more than one card; so take out another offering 0 per cent on new purchases for spending.
Pursuing low lifetime balances If you have serious debt, don't feel that a six-month introductory period is long enough to whittle it down and can't face the hassle of switching again when the offer ends, or if you usually carry some debt over at the end of the month, consider a card with a low lifetime balance. Any balance transferred to the card is charged interest at a low rate - the lowest is around 8 per cent. While the balance transfer rate may be very competitive, the rate on new purchases might not be quite as attractive: It is usually the standard APR. If this is the case, get a second card for new purchases.
