Credit card interest is charged on the amount borrowed and is charged by the issuers. So, the name low-interest credit cards sound intriguing enough, while there are no doubt advantages to having a low-interest credit card there are equal disadvantages which you must know if you are planning to go for such a credit card. We hope by the end of the article you will feel much clear about going for a low-interest credit card or not, compare the pros and cons and easily apply credit card online.
Pros of having Low-Interest Credit Cards:
1. Saves you money:
If users do not make the monthly payment according to the given deadline on their credit card balance, interest is charged. This interest is known as credit card interest, if you do not pay the balance in full each month then a fixed percentage of interest will be charged on the outstanding amount. These credit cards have low-interest rates, which prevents users from accruing additional interest costs.
2. Low annual fee:
Another advantage of having a low-interest credit card is that these types of cards generally come at a low annual fee. If a particular sum is charged to the card annually, your card’s issuer might even waive the yearly charges.
3. Low interest:
As the name self explains, the greatest advantage of having low-interest credit is the minimal rate of interest users have to pay. Unlike most premium credit cards which require customers to pay high interest on their credit card, these credit cards have minimal interest that is comparatively much easier and cheaper to pay.
4. Beneficial for repaying existing debts:
Obtaining a low-interest credit card can indeed be beneficial if you currently hold a credit card that you are finding difficult to clear. One can settle down their credit card debt accumulation by taking advantage of low-interest credit cards. Consumers may do so without incurring any additional interest payments.
5. Helpful if you have previous pending debt:
If you have a pending debt on your credit card with a high-interest rate, you may move it to a card that provides a 0% or low introductory rate on balance transfers. This allows customers a gap of a moment during which no interest will be charged on their sum, allowing all of their installments to be applied directly to the loan. As a result, people can reduce debt more quickly.
6. Can help you in improving your credit score:
Since you do not have to pay extra interest on the balance amount you will find it much easier to pay off the balance (even more than the minimum) each month, making timely payments and staying under your CUR will automatically help you in boosting your credit score.
Cons of having a Low-Interest Credit Card:
1. People who have no credit history have a hard time finding a low-interest credit card:
It is challenging for individuals with poor or no credit history to be authorized for a credit card like this. These cards are solely intended for people having strong credit histories. You may be qualified for reduced interest rates on the credit card if you possess a solid expenditure history, a spotless credit past, and have paid all bills and EMIs regularly and on time.
2. Not many perks are available:
Low-interest credit cards are generally used to pay off existing debt therefore, the exceptional perks often come with a credit card that comes with a high-interest rate. Like air miles, cashback, discounts, gift vouchers, joining bonuses, etc. there are not many overly beneficial or unique perks available with low-interest credit cards.
3. Charges for balance transfers:
Although low-interest credit cards let a person settle off their existing loans, transferring a balance requires caution. Balance transfers are viewed as a benefit since they allow you to pay off the remaining balance on a high-interest credit card using a low-interest card but the catch is that you may have to pay charges associated with balance transfers. Therefore, caution must be used when shifting debt from an existing credit card to a card with a low-interest rate.
4. Falling prey to the card:
One shouldn’t get too relaxed since they are planning on carrying a low-interest credit card. Users may start to laze around while thinking that a low-interest credit card is having their back which is a very dangerous thinking, it may lead to you missing your bill payments and the remaining balance will start accruing interest. Hence you will fall prey to the endless debt cycle (again, if you had balance transfers).
5. Higher rates of interest apply to cash advances:
Cash advances as the name hints are cash withdrawals done using your credit card. Basically, you are borrowing from your credit card to get money into your wallet. Unfortunately, there are fees associated with accepting a credit card cash advance, as well as restrictions on how much people can borrow in certain situations.
6. Credit score may momentarily be impacted by a fresh credit card:
Unlike checking your credit score which is considered a soft inquiry, when you apply for a new credit card, it will result in a hard inquiry which could lower your overall credit score. Just remember that it will only have a little fleeting effect. A minor drop in your rating is not something to be concerned about unless you need to maintain excellent credit because you plan to submit a loan application shortly.
Low-interest credit cards are intended for people having solid credit histories since the danger to the lenders is significantly reduced. Therefore, users must ensure that they constantly examine their credit files if they want to benefit from cheap interest rates on their credit cards. Whichever option you choose, keep in mind that any current fees and past-due bills will not just disappear. Users can have help in saving some money and buy a little more time with a low-interest credit card, yet they’re still on their own for the remaining portion.