Benefits of Low Rate Credit Card Offers

August 11th, 2010

Low rate credit card offers are extremely useful for a number of reasons. Firstly, of course, they ensure that you will be paying a lower interest rate on purchases that you cannot pay in full.

This means that your overall cost for purchases not paid in full will be much lower than with any other type of credit card. In other words, you will be able to save a healthy amount of cash on any expenses you charge to your card.

10.99% p.a.

How Do Low Rate Credit Card Offers Work?

The interest rate financial institutions charge is essentially the price you are paying to use their money. After all, everything has a price and that includes money. Since interest rates are calculated basically on a monthly basis, even though they are referred to as being yearly, this means that the longer you take to pay off your debt, the more you will owe. For this reason, you need to ensure that you pay off your debt as quickly as you can.

Reduce Debt With Low Rate Credit Card Offers

Likewise, most low rate credit card offers provide cardholders with an additional facility that allows them to reduce their existing credit card debt at a fraction of the cost. Balance transfers come with extremely low introductory interest rates that are valid between six and twelve months, depending on the card and the issuing institution.

However, while this may be a great way to reduce what you owe the banks, you also need to be aware of the fact that once the offer period runs out, the balance transfer will be subject to the interest rate normally applied to purchases, in most cases. You also need to be aware of the fact that while you have an outstanding balance transfer, any repayments you make will go towards the balance transfer and not any purchases you make. This is why it is often wise not to use your credit card to make any purchases or withdraw any cash until you pay off the balance transfer so that you don’t rack up even more debt.

Low Rate Credit Card Offers: Interest Rates

Low rate credit card offers also come with different types of interest and it is wise to know what charges you might be looking at in advance.

For example, there is the purchase interest which is applicable to anything you might buy with your credit card, whether from a brick-and-mortar shop or online. This can include anything from clothing to your weekly grocery shopping.

Then you have the cash advance interest rate which is usually quite a bit higher and is applicable to any funds you withdraw from your card. Special interest rates are additional charges you incur in certain situations such as when you make a balance transfer.

Then there is interest on interest. In this case, the previous interest is added to your existing balance and you pay interest on the whole amount. Since this is a situation of compounding interest, you would be wise to pay off your debt as soon as possible before it spirals out of control.

Editors Choice: Featured Credit Card Deals

	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
Westpac 55 Day Credit Card	0% for 5 months (reverts to 19.59% )	3.99% for 6 months	$0	21.49%
Citibank Clear Platinum Card	11.99%	2.9% for 12 months	$99	21.74%