Qualifying for low interest credit cards

Like any other loan, your interest rate on a credit card depends on your credit history and other factors. It is important to remember that a credit card represents a loan -- albeit one that has a revolving line of credit that you can continually access as you pay it down. This means that credit card issuers look at the same sorts of things that any other lender looks at. Here are some of the things a credit card company looks at when trying to decide what interest rate to give you:

• Your credit history.
• Your credit score.
• Your income.
• Other debt obligations (such as a mortgage) that you may have to pay.
• Other attempts to get credit cards in the last six months.

All of these things can determine what sort of interest rate you get on your credit card. Indeed, if you have poor credit, or if your debt to income ration is rather high, you will be considered a higher risk, and your interest rate will be higher as a result.

The benefit of low interest credit cards

The main benefit of low interest credit cards is that they offer you a chance to pay less in interest charges. Interest is a finance charge that lenders require you to pay when you borrow money. It is expressed as a percentage of your balance. The higher your balance, the higher the dollar amount you will pay. For example:
    If you have $1,000 on a credit card that charges 12% annual interest, every month you will be charge 1% of $1,000. This number is $10. So you will have $10 added to your balance, making it $1,010 that month. If your interest rates was 24%, on the other hand, your interest charge would be $20 per month.
    You can see how different interest rates on credit cards can start to add up. It is important to realize that this money does not get you anything in exchange. You do not get goods or services -- you merely pay the money to the credit card company. It is easy to see why low interest credit cards are preferable to those with high interest rates. Of course, the best way to avoid paying interest charges is to not carry a balance. Then the company can't charge you interest.

Low introductory rate credit cards

In some cases, you will see credit cards with very low interest rates. These types of low interest rate credit cards are characterized by the fact that they have introductory rates. These intro rates can be 1.99%, 3.99% or 5.99%. In some cases, you will find introductory interest rates that are 0%. These rates are meant to encourage you to transfer your debt from other credit cards to the new card. The rates, though, are only good for a limited time: six, nine, 12, 18 or 24 months.

As with any other low interest credit cards, the kind of intro rate -- and the time period that it lasts -- depends upon your credit history and income. If you have a good credit history and a fairly high income, you can expect to get a 0% interest rate for at least a year. However, you should be warned that if you go over your credit limit, or if you pay late, your intro rate could be revoked, resulting in a higher default rate in excess of 24.99%.

Many people use these low introductory rate credit cards to transfer debt and pay it off faster. This only works if you have a debt reduction plan and the discipline to stop getting into more debt.

Low interest credit cards can be of great benefit to you -- if you qualify for them. Carefully consider your options, and work on getting your credit score up to snuff, and you might find that you can get a credit card with a lower interest rate.