It is important for every credit card holder to understand how interest rates are calculated and how rates affect your expenses. There are a lot of credit cards in the market that offer an incredibly low rate and for most credit card shoppers, a low interest rate credit card is a good deal.

In fact, 0% interest rate credit cards are undoubtedly the most lucrative in the market. The question is, how long would the low interest last? More importantly, how much will the rate be when the introductory period expires?

Different Interest Rates Apply

Being aware of the precise terms and conditions, particularly on the costs of your credit card is crucial. Take note the interest rate applicable to balance transfers may be different from the rate applied on new purchases and cash advances.

Some zero-interest cards impose high rates on purchases and an even higher rate on cash advances. That means, when you use your card for purchasing an item, you could spend a lot more than the original price if you fail to pay off your full balance on time.

Other Fees and Changes

Watch out for expensive fees associated with your zero APR card. For instance, annual fees may soar up to $50 or higher. The overdraft fees and late penalty charges can be expensive as well.

There is also a risk of becoming disqualified from enjoying the zero interest rate if you fail to live up to your issuer’s Terms and Conditions. You need to pay close attention to the disclosures and restrictions stipulated in your contract.

Credit History and Eligibility

Credit card companies that offer a zero introductory rate usually require good or excellent credit history. If you have a low score, submitting your application may only cause rejection.

It is wise to consider the credit requirement of your chosen issuer before sending your application. In case you find that your credit score does not qualify, it is not too late to work on improving your personal credit history.

Reminders for Cardholders

When shopping for a credit card, remember that a low interest rate does not always guarantee the best deal. Carefully examine how long the introductory period lasts, the rates after the introductory period ends, and other costs associated with the credit card. If the credit card has a rewards program, make sure that it fits your lifestyle so you can make the most advantage out of it.

About the Author
Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended Loans for People with Bad Credit.
Copyright 2010