Three Keys to Using a Low Rate Credit Card

Low rate credit cards permit users to purchase goods and services or pay bills with minimal interest compared to standard purchase or rewards cards. However, it is advisable for card users to keep these three things in mind when employing their low rate credit card.

Make payments early

Lenders credit payments when they receive it, so the earlier a balance is paid, the less interest the user pays. As more of each payment goes to the balance, the faster the debt will be paid and card users will avoid unnecessary payments. Card holders should pay as early as possible, as often as possible, and as much as possible to save substantial sums of money in the future.

Avoid unnecessary rates and fees

Card holders should be sure to:

• Make payments before the due date
• Never exceed credit limit
• Avoid dishonoured (check) payments

Failing to do any of the above may result in a default or penalty rate activation, which is an expensive rate that will counteract any savings reaped from a low rate credit card. While these are unforeseen occurrences, card holders should further seek the default rates charged by lenders and use it as a factor in deciding which low rate credit card to own. Some lenders activate the penalty rate after one missed payment, but standards vary between lenders.

Default interest rates are expensive and it may take anywhere from 3-12 months of consecutive, timely payments for rates to revert to the normal low rate.

Don’t get too greedy

Having one low rate credit card is great, having two is good, but having three just may be greediness. Applying for multiple credit cards raises red flags to lenders, and this can hinder the extension of future credit to some applicants. Missed and late credit card payments will also affect a card holder’s credit. Therefore, efficient payments are not only beneficial, but essential.