One of the significant advantages of owning a low interest credit card is the potential to avail of low interest rates and transfer your balance. It gives you the chance to consolidate your debt and manage payments properly. However, there are specific drawbacks that you need to consider. Here are some disadvantages of using this type of credit card.
Limited APR Coverage
One of the potential drawbacks of a low interest credit card is its limited APR coverage. It means that you only avail of 0% or low interest rate for a short time. Most companies offer this as an introductory incentive for customers. After the duration of coverage ends, you will now have to go back to the original APR. That is why it is important to take note of these terms so you can properly manage your balance and prevent incurring a higher interest when the introductory period ends.
Qualifying for a Low Rate
The cost of low interest credit cards also come from the inability to get the rate that you desire. Even if you applied for an interest that is smaller than the regular credit card, providers would continue to assess by credit rating. It means that you will get a competitive rate when you have a good credit standing. However, if your credit score is low, you might get a rate that is different. That is why it is best to compare providers available so you can have an estimate of how much interest rate you will likely receive.
Another cost of low interest credit cards is the presence of additional charges. It means that your credit card will charge you extra for specific transactions. For instance, if you are using the card to transfer your balance from another credit card, then you might need to cover a particular fee for the transfer. Usually, the rate is 3% of the total balance. If your debt is large, then the additional fees can become expensive. It is advisable to review these costs and calculate whether it continues to work well with your expected budget.
Penalties and Charges
Having a low-interest credit card does not mean you can make pay your balance late. If you make a late payment, you provider can charge you extra fees. Also, depending on your agreement, the credit card can terminate the existing low APR offer if you become a delinquent in settling dues. Although penalties occur due to your inability to make on-time payments, it can also become a disadvantage because of the possibility of acquiring additional debt.
Overall, low-interest cards have particular advantages and disadvantages. As a user, you need to become familiar with these issues to help manage spending and finances. The limitations mentioned above are considerations you need to make. You can maximize the value of this type of credit card if you consider the timeframe of the low APR coverage and additional rates. By making your payments consistent and timely, you can prevent these problems from occurring.
What’s the cost of low interest credit cards? We try to dissect it for you so you know what you’re getting into at www.lowestinterestcredit.cards.