Credit Card Articles
Low Intro Rate Credit Cards Can Be A Trap
You've probably received at least one invitation to apply for low interest credit cards in the past. Before you sign up, make sure you know exactly what you're getting yourself into. If you don't read over the contract, you could find yourself in trouble.
Story after story happens where people get accepted quickly, get a huge credit limit and then a year later, the APR goes soaring through the roof.
You may jump at the opportunity for a low interest card as a way to build credit history. There's fine print to read, however. The interest rate is going to increase as soon as the introductory rate is over. If you don't look at when the intro rate is set to expire, you could be caught off guard. If you have been using your credit card freely, the interest rate is going to send you into debt.
It's not uncommon for a credit card to go up 20% or even more once the intro rate is over. If you don't pay attention to what's going on, you could have two or three cards with the same problem. You may then find yourself unable to make payments, paying late fees and ruining your credit history, making it hard to get yourself out of debt.
There are some things you need to look for before signing up for that low interest rate credit card:
1. Read the Fine Print
All of the credit card applications you get in the mail have fine print that tells you about the low interest rate and when it comes. You may need a magnifying glass to get the details, but you'll find it if you look closely. Make sure you read it so you know what the deal is as far as when the intro period ends and what the new rate will be afterwards.
There are actually low rate cards that aren't an intro rate. When you have good credit or you're a student, you may qualify for these. Often these are with some of the big banks. Just make sure you look at all the offers and apply for the best one.
3. Look at Options
Look at all the options that you can get with a card and make sure to pick out the best one. Not all cards are the same. You want to get the lowest permanent APR as well as one with no annual fee if you can help it. Take the time to check out a few different banks' offers. Remember that all banks make money off of interest rate and fees, so you will always be charged at least something for using the card.
4. Speak to a Customer Service Representative
Don't talk to just anyone - talk to someone who really knows what's going on. This will allow you to get some additional questions answered that the fine print doesn't cover. Ask about the intro rate, what the new intro rate will be and much more. Find out what other cards they offer that would be better for you. Just like any major purchase, you want to shop around. The same can be said about a credit card. The more you know and the more you know about your options, the better off you will be.
5. Keep an Eye on the Intro Period
Whether your introductory rate is 3 months or a year, you have to know when the rate is going to go up. The credit card company is simply going to increase it without any notice. One statement will be the low rate and the next one will be the high one. You need to be ready for the increase, otherwise the interest rate is going to send you spiraling into debt. Try to have the balance paid off or paid down low before the increase hits so that you don't find yourself in a debt situation that you can't get out of.
Ultimately, you only want to use the card if you can pay off the balance quickly. Don't get in the habit of only paying the minimum payment, especially when you have a large balance. The high interest rate cards mean that the minimum payment will barely cover what you pay in interest. This means you may never actually get yourself out of debt. You don't have to learn the hard way. A low intro rate card can be a good thing as long as you learn to read the fine print before signing up for the card.
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