If you browse through the market for low interest credit cards, you will notice that there are several websites and references where you can compare credit cards like you can compare different cellphones or hotels. The truth is, there is more to finding low interest credit cards than just looking at the interest rate per se. Here are the factors to consider in choosing credit cards that will give you low interest.
1. Look through the Annual Percentage Rate (APR). This is the interest determined by the company for a year. For instance, a balance of $1000 per year with an APR of 10% will yield a payable amount of $1,100 at the end of the year. The lower the APR the better. Moreover, there are two types of APR: fixed and variable. The best choice so far is fixed APR. A variable APR is linked to the prime rate controlled by Federal Reserve. Once the prime rate increases, your APR will also increase. Variable APR is only favorable for low interest credit card if the prime rate is trending downward and you are able to detect such trend.
2. Maintain high level of credit score (or FICO score). If you have bad credit score, most likely, you will not get the low interest credit card that you need or your application will not be approved at all. FICO scores determines the risk of the company to provide you loan. The higher the score, the better is your chance to get low interest credit card. The scores are determined by credit bureaus when they evaluate your annual credit report.
3. Dig into the terms and conditions. Even if the APR and your credit score seemed favorable, it is best to check the terms and conditions determined by the company. You need to be watchful when the APR change. There should be a note that the company should give you notice on the changes. There may also be 0% introductory APR in most low interest credit card but you need to look at how long this introductory interest applies in one company against others.
Now that you understand what to look into in finding low interest credit card, you should narrow down your choices where to apply. You have to apply only one company at a time as many credit applications will affect your FICO score in the long run. If you get rejected in one company for a certain reason, you can then jump to your second choice.