Rachel Robson takes a look at why you might be better off using a low interest credit card.
Rachel Robson takes a look at why you might be better off using a low interest credit card.
In today’s video I’m going to look at four benefits of using a low interest rate credit card.
1. Low rate for life
Whether you’re using your credit card for spending or to carry out a balance transfer, you’re bound to want to pay the lowest interest rate possible.
Some credit cards allow you to pay no interest at all for a set period. But once that period is up, the interest rate jumps dramatically. So if you haven’t paid off the balance in full by the time the interest-free deal expires, you’ll get hit by hefty interest charges. As a result, you will need to transfer your debt to another card.
However, a better option might be to choose a credit card with a low rate of interest for the life of the debt. This means you can spend on the card, or transfer a balance, and know you’ll be paying that low rate of interest until you’ve paid off the balance in full. And this means you won’t have to keep switching credit cards.
2. Avoid negative order of payment
Because low rate credit cards offer a low interest rate for both purchases and balance transfers, you won’t get caught out by a sneaky trick called negative order of payment. This is when your cheapest debts are paid off first, leaving you to rack up interest on your most expensive debt.
3. Money transfers
Another advantage of low interest rate credit cards is that some allow you to carry out money transfers. So this means you can transfer money from your credit card straight into your current account.
You can then use this money to help pay off an expensive overdraft, for example, and you'll only be charged the same low rate of interest.
4. Fewer fees
Unlike most standard credit cards, many low interest rate credit cards won’t charge a fee for carrying out a balance transfer. So if you want to transfer a debt across from your existing credit card, you won’t have to worry about paying around three percent extra for the privilege!
Don’t forget, you can compare a wide range of credit cards right here at lovemoney.com