Let’s face it, having a credit card or two – or three is a common element of many of our lives. My husband and I certainly do rely on the credit they offer, while also trying to make sure we save money and can pay off our card balances within a decent amount of time. While being able to stick as close to our budget, we do try our best to minimize the number of cards we have, keep these charges down and stay on track with our finances. However, there are times when we run into some money difficulties – as I’m sure many people do.
As I continue to seek out ways to improve our financial situation and look for better methods – one area that always comes up is the issue of credit cards. Everyone should always weigh the pros and cons of their credit cards to ensure they are getting the best deal for their needs. One credit card challenge that certainly makes it difficult to pay down credit balances is the amount of interest that we have to pay each month. With that said – perhaps switching to a low interest credit card is the answer?
If a low interest credit card is something you have been considering – there are some aspects of these cards that you will want to be aware of as well as monitor on an ongoing basis, if you already have one.
Considerations Associated with Low Interest Credit Cards
1) Lower Interest Costs
The best way to narrow down if a credit card with low interest is for you, is to first consider your re-payment habits. If your habits are such that you can’t or don’t want to pay off your credit card balance in full each month, then going with a card with low interest makes sense so that you won’t have to pay off even more of these charges each month. In the long run, having to pay off a lot of interest on top of your actual credit card balance will only prolong your ability to pay down your bills and this credit card may be beneficial.
2) Lower Minimum Payments
Another feature that makes a difference with your ability to meet monthly payment requirements is the monthly minimum payment amount. Especially for low interest card users who are carrying a balance from month to month, it will be important to be able to afford at least the minimum payment charge each time – as missed payments can lead to financial challenges, poor credit being a top concern. Many low interest cards will see a lower minimum payment, and in some cases while the interest rate may increase over time – the minimum amount should stay the same.
3) Promotion Periods
The last point leads us into this third point, as there are circumstances where low interest credit cards can turn into cards with higher rates. When signing up for a low interest credit card, you will want to pay attention to the fine print that highlights whether this low rate in fact has an expiry date. Sometimes, there will be promotional periods that provide the opportunity to sign up for a low interest rate card, which is likely to increase after a set amount of time. Typically this period ends anywhere from a few months to a one year range. If this is the case, and you are using this type of card to get a bit of a handle on your balance, it will benefit you to pay off your balance in full – or as much as you can before the promotional low interest period ends.
One thing I would say though about trying to figure out how to manage our finances is that often there is not just one approach that you can use to tackle your current situation. More often than not, using more than one method might be appropriate.
Perhaps then going with a low interest card at times when you are unable to pay off your balance in full could work in your favour. If you then get to a position where you can start committing to paying off your credit card balance completely each month, this again would be ideal.
Ultimately, falling into tricky financial situations can happen to the best of us and we need to look to a variety of strategies to help us make it to the other side of these monetary challenges. Consider a low interest card and be sure to know these cards work before you sign up.
