Low Interest Purchase Cards

August 23rd, 2010

When you use your low interest purchase cards to buy things, you are saving money because you won’t have to pay as much interest on those charges as long as you clear your balance.

You can also manage to have a smaller balance because more of your payments will go towards what you owe instead of going to pay off the interest.

Low Interest Purchase Cards and Saving Money

Therefore, if you have one of the low interest purchase cards that charges a relatively low interest rate on purchases, such as 12% or more, and you have a large balance on your card, you need to consider doing a balance transfer. Switching over to a low interest balance transfer card will allow you to save even more money that would otherwise go to interest. This will allow you to pay off your card more easily and you’ll be debt free before you know it.

So how can you tell whether or not you need one of the low interest purchase cards? You can tell you need it when you are someone who usually has large balances on your cards every month. If that’s the case, then you need to make finding lower interest rates your prime objective.

How Interest Works

Credit card interest is money charged by the credit card companies in return for you being able to buy things with your credit card. This interest gets tacked onto the balance you fail to pay off every month, and also on anything you buy. Therefore, you need to make sure you save as much as possible, and possibly avoid paying interest in the first place, by paying off what you owe in full every month.

Carrying a Balance

It’s usually the case that most people have a balance on their cards. That’s just how life goes. So if you have a credit card with a 20% interest rate, you would be paying 20% on top of what you already owe. Now, think about that when you consider how much interest you’d have to pay if you got one of the low interest purchase cards with a 10-15% interest rate. Now you see how much money you could save with one of these cards!

Unlike other types of credit, credit card interest is calculated by the day, and that means your interest rises at a much faster rate. So your interest would be growing on top of your balance, and on the interest that you’ve already accumulated. So if you owe lots of money, then you need to find one of the low interest purchase cards immediately so that it doesn’t take you your entire life to pay off your debt.

On the other hand, if you are responsible with your finances, and you usually pay off what you owe every month, then you might not need a low interest purchase card. Instead, it would be better for you to find a card that gives you time to pay off what you owe before you get any interest tacked on. Some cards may give you up to 55 days to pay off your balances and some may give you months, and this allows you to pay your balance without any of your payments going to interest charges. As long as you pay off that amount by the time the deadline is over, you won’t be charged one bit of interest.

How do They Calculate Interest?

As we’ve already discussed, credit card interest is calculated daily on your outstanding balance, but it’s capitalized onto your credit card balance as a total figure at the end of the month. However, like most customers, this doesn’t fully sink in as to how the process works.

If you only make the minimum required payments on your card, your payments will mostly go towards your interest and not towards the amount you owe. This will leave you with a high balance month after month. However, by making several smaller payments throughout each month that should add up to a little more than the minimum monthly payment due, you can actually help to reduce the amount of interest you pay in the long run.

Remember, your interest is calculated daily on the amount you owe, so paying little bits off the balance through the month reduces the interest that can be charged.

Therefore, if you can’t make more than the required minimum payment, and you have a large amount of money that you owe, you need to make sure you keep a look out for low interest purchase cards. If you don’t do that, you will just be throwing out your hard earned money. This might also put you deeper in debt. So when you’re confused as to what to do, you should always opt for the choice that’s the safest and that’s to go with one of the low interest purchase cards.

Editors Choice: Featured Credit Card Deals

	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)