Interest rates are set within two different areas; spending and balance transfers. Most cards, especially those with very good interest rates, price these two types of borrowing in different ways. Repayments are also normally taken off the cheaper of the two before they take any payments off the expensive sources. Knowing this is vital as this can add quite a bit to the cost of cheap credit cards.
Options to consider when looking for cheap credit cards
Low rate balance transfers can also save you quite a bit of money. Low interest rates are normally offers given to new customers which expire over a certain period of time. After the introductory period is over, you will most likely be charged a much higher rate.
If you are someone who can lose track of time and isn’t very well organized, you may want to look into a more long term deal, even if the balance transfer rate is higher. Something else to stay clear of is using these cards for purchases, as the interest rate will be very high on spending and any repayments can be costly. For these reasons, it’s always a good idea to have a different card for making purchases.
It is also worth checking whether there is a time limit on how long you have to take advantage of the balance transfer rate on any balance transfers you may make.
Another option to consider when looking for cheap credit cards is a zero percent rate card. These cards will often give you a zero percent rate from anywhere between three to fifteen months.
When applying for these types of cards, it is advisable to get a card with the longest interest free credit period, as applying for a number of new cards within a short period of time can hinder your credit rating.
A final option for cheap credit cards is a card with low rates on spending. However, it is not advisable to use this type of card for balance transfers as they can turn out to be very costly.
