Low interest credit cards offer a respite from the sky high rates many credit cards charge. Instead of charging APRs north of 15 percent, most low interest credit cards offer introductory rates as low as 0% APR and ongoing rates in the low single digits.
Because of this, low interest cards are seen as the superior option for people who want to carry a balance or pay down a large purchase over time. With a low interest rate, consumers can save money on interest and pay lower monthly payments over all.
Still, not everyone can qualify for a low interest credit card. If you're in the market for a low interest card but aren't sure you're eligible, here are some tips that can help you get started:
Get a Copy of Your Credit Report and Credit Score
If you're curious how your credit looks, your first step should be getting a copy of your credit report. Fortunately, you can access a free copy of your credit report from all three credit reporting agencies through AnnualCreditReport.com. Once you have your report in-hand, check for inconsistencies. If you see a mistake on your report, you should take action to dispute it immediately.
There are numerous ways to see your actual FICO score, or an estimate, as well. Certain credit cards offer a FICO score on your monthly statement for free, for example, and several websites offer an estimate of your score just for signing up.
Pay All of Your Bills on Time
By and large, the best low interest credit cards go to people with good or excellent credit. Because of this, you should focus on improving your credit if it needs work.
Since your payment history makes up the bulk of your FICO score, the biggest impact you can make is in your monthly payments. Pay all of your bills early or on time and without exception, and those on-time payments will be reported to the proper credit bureaus.
Pay Off Old Debts and Limit New Ones
Another factor that plays a big role in your FICO score is your credit utilization. Where some utilization is generally seen as okay, most experts suggest keeping your debts below 30 percent of your credit limits.
If you are constantly maxing out credit cards or carrying large balances in relation to your credit limits, you can improve your credit by paying off old debts and limiting borrowing.
Shop Around for the Best Low Interest Card
Low interest credit cards come from many issuers and in many forms. Because of this, you should take special care to shop around.
Make sure to compare other factors in addition to the interest rate, including any rewards programs, annual fees, and credit card perks. Once you compare each card in its entirety, you'll be in the best position to find your ideal low interest card.
Don't Give Up
If you can't qualify for a low interest credit card now, don't despair. Once you improve your credit enough, you could be eligible for any credit card of your choosing.
Give your credit the respect it deserves, and your responsible actions will be repaid in the form of positive credit reporting. Just like anything else, however, improving your credit takes time.