Surprising Facts

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Take Advantage

Low interest credit cards are a dream for many. After all, if people were given a chance to purchase items on a monthly term basis with very little to no interest, then most people would be buying their dream gadget or item. But alas, credit card companies do not hand out a credit card application because of a sense of making people’s dreams come true. They’re in it for the money.When it comes to credit, companies most often base their rates on two things: company rates and the FICO score and credit rating of the debtor. The argument goes that, a person with a high credit score is statistically more probable to pay off their debts on time. The way a person conducts his finances plays a huge role on these matters.Individuals who have a stable income, perfect record of paying bills on time and belong to a socio-economic stratum that shows a lot of promise are given preferential treatment because they are seen as good investments.Remember, credit card companies are business entities and the only reason why they hand out low interest credit cards are to incentivize the whole process and to get the attention of would be customers. In reality, however, these low interest cards are a means for them to reward customers who ensure that their payments are on time.It’s a possibility that both of the reasons mentioned above are true. But are there really cards with low interests despite the bad credit ratings of the individuals who apply for them? This is the next best thing to physically comparing one credit card application to another.Yes, there are low interest credit cards in the market, but a surprising number of consumers aren’t aware of them. According to the FINRA Investor Education Foundation in a 2009 study, almost one third of their respondents replied negatively concerning interest rate awareness. This indicates that consumers really don’t pay attention to the fine print, or they simply don’t care.Evidently this, along with the continuing decline in the outstanding credit card debt balance of Americans which went down to $795.5 billion which is the lowest since 2006, indicates an overall misgiving about credit cards, according to a Federal Reserve Board research. These numbers may make one think about whether people even read the credit card application they’re signing.It may be time that the banking sector rethinks its policies. Already, companies such as Capital One, offer low interest credit card offers in the hopes of buoying consumer confidence and attracting new customers. They’re doing this through their very well known card called the Platinum Prestige Credit Card. Among the features that this card offers are:Introductory Annual Percentage Rate Purchase of 0% which is valid until June 20120% Balance Transfer Percentage0% Annual Fee10.9% to 18.9% Annual Percentage RateThis is similar to Citibank’s Citi Diamond Preferred Card which carries the same Introductory APR, Annual Fee and Introductory APR upon balance transfer. But rather than setting a date as the limit for their introductory offer, they’re pegging the offer at 18 months. After which, the APR would then become 11.99% to 20.99%.Another one is the Discover more card, which differentiates itself from the others only in terms of the introductory period of 15 months and an APR of 11.99% to 20.99%.With an overall average APR of 14%, the rates being offered by Capital One, Citibank and Discover are some of the lowest in the industry.Availing of this would give you the opportunity to take advantage at the soonest possible time particularly in Capital One’s case, which expires on June 2012.With consumer credit on the whole, rising to record levels since the collapse of the Lehman Brothers, it’s safe to say that American borrowing habits have taken on a more prudent turn.Should you fill up that credit card application form with these low interest credit cards?It depends. You need to have a financial goal for the acquisition of these cards. Remember that credit cards are only the next best thing to cash. The only advantage that these can really give you is that they can make things available to you at the soonest possible time. Otherwise, you’d still have to save up money just like in the old times.Purchasing items on a cash basis is still better because there’s no interest but only if you have cash. In the end, you’re supposed to use these credit cards if you think that your finances can handle it.Another advantage you could derive from these best credit cards is that you could improve your credit score if you exercise financial responsibility. Stick to the credit limits and then ensure that your payments are always regular and even advanced. When the credit card company sees this, they’ll eventually report to the various credit bureaus your better score. Having a better credit score will be your gateway to a higher credit limit and even lower interest rates.Forget about the philosophy of using credit cards as a status symbol on a prima facie basis. The only reason why they’re a status symbol, is because you’ve been able to demonstrate your financial acuity. The more responsibly you treat your low interest credit cards, the more that the banks would be willing to give you low APRs. It’s a cycle that takes a long time to complete.The people who have been able to brandish golden credit cards bear that distinction because they’ve been able to manifest that they can fulfill their financial obligations with cards of smaller stature. Even if their gross incomes are huge, if they have not been able to pay off their cards on time, they would not be issued these greater value cards simply because they’re not worthy.Banks and credit institutions work on an honor system that bases its values on merit. In short, you wouldn’t be given something if you don’t deserve it.To get higher credit limits and lower interest rates, you must first demonstrate your ability to pay off these low end cards. Once you do, your credit score will improve. Once your credit score improves, it would be the banks themselves who would constantly call you and offer you higher value credit cards. They’ll even mail the credit card application on your doorway.