Lowest interest is the best money that lenders can spend. Lenders will have a better chance if you save for the longterm or when you buy something. For example, if you have an interest free long term credit card, then you get higher rates on your interest cards. And here is the crux of the matter. You want to pay off your outstanding balance, then interest rates will actually affect your payment.
So if you happen to be in a position where you pay off the principal by late fees or dues, then you end up with more interest than you can afford if you keep the interest card. But there is one thing you don’t have access to, and that is your outstanding balance.
Many people (mostly men) and companies (notably some credit cards companies) that attempt to offer low interest rates are in fact trying to lure you into thinking that you ‘re already paying interest’ for a purchase you made ‘but then you realize that’s not always the case. As soon as you see these types of ads, it’s very easy for you to get blown away that you don’t have room to pay.
Many lenders ask how much your balance should be before the introductory offer. This matters a lot. The assumption is that having your payment for a purchase (what should have been a pre-arranged purchase, now only a pre-made sale) will look bad on the information site, because many lenders will look at any outstanding balance as they would that of a co-signer. Many will note an adjustment toward higher interest being made, if the interest rate is significantly lower.
This is where a low interest credit card comes into play. Again, the assumption is that you can maintain a balance on your high interest cards. But, usually, some credit card companies have 0% interest on the balance until after the 0% introductory offer is over. So if a prime 30 year-old person will pay off their balance after the introductory offer, well, they will pay off their debt after the first year.
Another difference with low interest credit cards is the fact that it makes it seem like you are only paying off the outstanding amount because you are paying interest, rather than low interest. The credit card companies know this is not the case. Here is why.
To get people to think that you are not responsible for increasing the amount of the balance, you have to be serious. Many credit card companies will ask for a balance increase in order to get their clients to buy the account. Because of the high interest, especially credit cards often, they will require much higher amount payments to cover the outstanding balances. And because of excessive amounts of the interest that you have to pay, you will be forced to pay payments or take other risks (and not risk getting turned down even more). It is common for retailers to have to raise the full balance to finance a title sale, but you are still responsible for paying the debt (or risk becoming a default author on your loans and credit cards).
I know, you want to know how these things work. Here are some recommendations as to how you can get ‘informal’ about the workings of credit cards.
Ask for information on any credit card companies that do not accept applications for low interest credit cards (they are on edge). They will give you a lot of information, the last sentence of which is probably the most important, but it will take you 5 minutes to read.
Ask the the credit card company whether there are any pre-set financial benchmarks for how high a card may be automatically converted into a card (most often, a small percentage of the credit card balance). Find out how long the introductory offer will last. Are there any other pre-paid or pre-directed transactions (if there are any) that might have an unusually high interest rate after that period?
Get all three annual statements with hundreds of facts and figures to draw out a conclusion based on. Don’t let them get in the way of your logical deduction.
So, it’s important to make as much of a effort to keep the other two areas covered as possible to create a solid plan for your debt and spending.
Many of the lowest interest credit cards are truly amazing. Don’t wait until you are ready to call them in the emergency room. As long as you can always always increase the amount (or risk it getting much higher if you don’t do so). And if you think they are overpriced, then do not let yourself go until you find a better 0% low interest credit card.
If, however, you are just starting out on a low interest payment, you may consider a debt consolidation loan (or even purchasing a HELOC). The goal is to go deeper than holding several accounts.