The most important thing for people who carry balances on credit card compare interest rates. Some cards offer low in May from 1.9% promotional rates, but you must be aware that this is probably for a period of time and increase in May so if you have not paid, the card or transfer the balance to another location. Beware the introduction of "teaser" rate. May the best for last a year or more, but some of them only last a few days. As always, read the fine print. A simple web search will show several comparisons of interest rates of credit cards. The best permanent (not variable), the rates at the time of writing are about 6.9%, the highest being 25%, the average is probably around 13% on an annual basis, making it the one of the most expensive debt. Remember that the interest, especially compound interest, adds quickly, and even a couple of points can have a big impact, if you carry any type of significant balance. Unlike mortgage interest, credit card interest is not tax deductible.
It is important for consumers to know if they receive a card with a fixed or variable interest rate. Variable will be linked to some market index like the first rate in a certain way. An example of 10% in May on the first. If the first is 5%, the rate is 15%. If the first increases to 7%, you get up to 17% and so on. It is interesting to note that the rate has more than doubled over the past three years before writing these lines and is currently just below 8%.
Credit card issuers typically have interest rates that they charge for different categories of consumers and the various types of transactions. Ironically, people who are less likely to be able to pay are charged the highest rates. The reason is that these individuals pose the greatest risk for issuers of credit cards, and also the most profit potential. People with bad credit and limited financial resources, even if they do well, get stuck paying for others in their same situation, which by default. If you manage your finances and to maintain good business credit, you generally get more credit and lower interest rates in the future.
The credit card business is very competitive and we can usually negotiate better rates with your transmitter, simply by calling them assuming you have good credit, are not overloaded, and made all your payments on time.
I do not usually credit card balances, but recently one of my companies wanted to use one of his credit cards to carry a small stock for a short period of time. When I saw that I would be charged almost 19% interest, I called the credit card company and told them that I would like to use their card for next purchase, if they could offer me a better rate interest. They lowered the rate by almost half to 12%, simply by calling my! In my case, this probably led to a nominal value of the savings of twenty or thirty dollars, but think of the savings for someone who has thousands of dollars of debt credit card for a period of weather.
Credit card issuers also classify the different types of transactions. Typically, you receive the lowest interest rates on balances related to regular purchases. Other transactions such as cash advances, have much more interest charges which are usually just under the limit to be considered usury (excessive illegally), depending on what state you live in (18 to 29%). Both balance transfers and verification (sub-section below) are sometimes classified as cash advances after the promotional rate period.
Thus, at the end of the day, what are you looking for in a credit card?
• Little or no annual fee
• A sort of rewards program
• A long grace period
• A low interest rate (if you balances)
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