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Watch For The Applications In Your Mailbox

This is a great time to be asking this question. The first of each year credit card companies send out multiple credit card applications due to the fact that most people have used their old cards to their limits during the holidays.

You should beware of credit card companies offering special deals in the New Year, especially if you are thinking of transferring a balance from another credit card. These companies run studies on people’s habits and they are looking for ways to increase their own revenue, not yours.

When it comes to credit cards, we all want to find the lowest interest rate possible. The higher the interest rate, the more expensive your monthly payment will be. However, before you go with a low interest rate card, here are a few things you need to know and understand.

Beware Of The Fine Print

If you have a large balance on a card that has a high interest rate, you may want to consider transferring the balance to a lower interest rate. The interest rate may lasts only for six months, and is shown only in small letters. Be aware, you may be caught off guard and sign up for something you are uninformed of.

While credit cards with lower interest are great, they are not for those with bad credit. If you have bad credit, you will not be approved with one of these cards. These cards are saved for those who have excellent credit scores and histories to go along with them.

One of the best games is that of the “rising rates!” Although lower interest rate credit cards look great at first glance, once again usually in small print they last only for a period of time.

Also, if you miss a payment or if you are late a couple days with your payment you can lose your new low interest rate and it will go up to more than 20 percent. Having a low interest rate can save you money, but you will never get something for nothing.

A Good Example

You are offered credit card A. They tell you that it will give you the following:

• 0 percent for 13 months on balance transfers (3 percent BT fee)

• 0 percent for 6 months on purchases

• A typical APR of 15.9 percent

Okay, you believe the card sounds pretty good. Then you use the card to make some purchases thinking you have the 0 percent for 6 months. Your bill arrives and it shows you are now paying the 15.9 percent. You call and ask why, and you are told any payment you make now goes directly to pay off the transfer amount first.

If you had not used the card to purchase anything the 0 percentage would have remained enforce. Since you did, the initial transfer has to be repaid first before the 0 percent on the first 6 months for purchases can kick in.

And guess what, it was all stated there on the forms that you signed!