7 Top Low Interest Credit Cards: Get the Lowdown

Credit cards are a great tool to help you gain some financial flexibility and freedom. That is a true statement only if you use them properly. When not used properly, credit cards will become your biggest nightmare. You have to start a good credit card using habits from the first moment you get a credit card. It is really hard to go back to better credit card use once you have dug yourself a hole of debt. Some of you are in the hole and are nodding your head. Others of you are wondering what in the world I am saying. Americans have $1.04 trillion in credit card debt and that continues to rise each year. According to USA Today, 60 percent of Americans pay large amounts of interest each month and cannot afford it.

Best Credit Cards with Low-Interest Rate

It is important for you to use your credit cards wisely so that you do not find yourself in the same situation as many Americans. In this article, I am going to talk a little bit about the basics of credit card use and how to stop yourself from getting out of control with debt. I am going to explain the importance of low-interest credit cards and highlight some of them for you.

When looking for low-interest credit cards, it important to remember that there are many options available to you. While a low-interest rate is super important, you still need to understand what else a particular credit card has to offer you. You may only carry a balance occasionally, so if a card gives you additional perks, you may choose one that has a slightly higher interest rate because it offers you more cash-back points. You have to look at everything the credit card is offering you.

Low-Interest Credit Card #1

Capital One Quicksilver Cash Rewards Credit CardThe first credit card with low interest on my list is the Capital One Quicksilver Cash Rewards Credit Card. This credit card has an introductory offer of 0 percent interest for 15 months. That means you are not charged any interest for 15 months, however, after that period, your interest rate goes up to anywhere between 15.74 percent to 25.74 percent, depending on your credit. Most of the time, a credit card company will not extend that 0 percent interest, but you could always ask before that period of time ends.

There are some other perks this card offers you, such as an unlimited 1.5 percent back on every single purchase you make, every single day. And there are no limitations and you do not have to enroll in it, it is automatic. There is no limit on how much you can earn and no minimum for you to cash in your cash-back. Your cash-back does not expire, so you can continue to let it grow. This card does not have an annual fee and they offer a one time bonus of $150 after you spend $500 within 3 months of opening the account. Honestly, this is my favorite credit card.

Low-Interest Credit Card #2

Discover It CardThe next card on the list of low-interest credit cards you should look at is the Discover It Cash Back card. This card comes with a variable rate of 13.49 percent to 24.49 percent. The interest rate depends on your credit score. With this card, Discover matches all the cash-back you earn in the first year. There is no limit on how much is matched. You do not have to sign up for this offer because it is automatic. You get 5 percent cash back at various places. The locations where you can receive cashback changes every quarter. You receive one percent cash-back for all other purchases. There is no limit to how much cash-back you can earn. You can redeem any amount you wish and the rewards do not expire. There is no annual fee with this card.

Low-Interest Credit Card #3

Capital One Venture One Rewards CardCapital One offers many low-interest credit cards, including the Capital One Venture One Rewards Card. This card has zero percent interest for 12 months, but then the interest rate goes up somewhere between 13.74 percent to 23.74 percent. You earn 1.25 miles for every purchase that you make every day. You earn bonus miles of 20,000 miles when you spend $1,000 on purchases within the first three months of opening your credit card account. This equals about $200 in travel money. You can travel whenever you want and you have no blackout dates. This card has no annual fee. The miles will not expire and there is no limit on how much you earn.

Low-Interest Credit Card #4

BankamericardBankAmericard is up next as one of the top low-interest credit cards. This card has an interest rate of 14.49 percent to 24.49 percent variable rate. It has an introduction rate of zero percent interest for 18 months. There is no annual fee for this card. This card does not penalize you if you make a late payment. Your interest rate does not increase with a late payment.

Low-Interest Credit Card #5

Citi Rewards CardCity Rewards + Card is another great option as one of the low-interest credit cards. This card has a zero percent interest rate for 15 months but then goes up to 14.99 percent to 24.99 percent interest. You can earn bonus points of 15,000 after spending $1,000 on purchases after three months of opening your account. When you use this card, it rounds up to the nearest 10 points every time you make a purchase. There is no limitation on points.

Low-Interest Credit Card #6

Bank of America Cash RewardsBank of America Cash Rewards credit card is next on the list of low-interest credit cards that you should consider. There is an introductory rate of zero percent interest for 15 months. After the 15 months, the rate goes up to 15.49 percent to 25.49 percent. You can earn 3 percent cash-back in a category you pick. Then you get 2 percent at grocery stores and wholesale clubs and unlimited 1 percent on all other purchases. There is not an expiration date and no annual fee.

Low-Interest Credit Card #7

Chase FreedomLast but not least, you must also check out the Chase Freedom card as one of the low-interest credit cards. This card comes with a zero percent introductory rate for 15 months. After that, the interest goes up to anywhere between 16.49 percent to 25.24 percent after that. You can earn five percent up to $1,500 in bonus categories that you choose. The categories change each quarter. You receive one percent cash back on all other purchases. Your cash-back rewards never expire and there is no minimum for redemption. This card also has no annual fee.

What Is A Credit Card?

You probably think you already know what a credit card is and how to use it. Maybe you do and maybe some of you only think of it as that piece of plastic that you carry around with you that allows you to buy items. It is important that you have a better understanding of credit cards. So, I am going to take these few moments and remind you of some credit card basics. This is also a great time to explain why low-interest credit cards are the best option.

That piece of plastic is backed by a bank, which means they are allowing you to borrow money with your promise to repay it. You are also responsible for paying any interest and fees. The bank allows you to borrow up to a certain amount of money. You can use it all at once or use only a portion of it. Any amount you use is due within 30 days. If you do not pay the amount in full, you must pay interest on the money you used but are not repaying right away. Interest is a confusing topic, so I will talk more about that later in this article.

No matter how much money you spend each month, there is always a minimum payment due. If you do not make at least the minimum payment, you are subject to fees and penalties. It can also negatively impact your credit score. You must be sure to pay at least the minimum each month. You really want to pay the entire amount each month, but many of us are unable to pay that much.

The way a credit card works is somewhat simple, as long as you have a complete understanding of it. If the credit card company extends you a credit limit of $3,000, that is how much you are able to use in any way you would like. If you use $500 of the available amount, you have $2,500 available to you. In about 30 days, you owe the credit card company $500. When you pay the full $500, you do not have any interest charges and your available balance goes back to $3,000. If you pay $300 of the $500, your available credit becomes $2,800. You are then charged interest for the other $200. This cycle continues each month.

What Is Most Important For Me To Know About Credit Cards?

There are many important items that you should know about credit cards before you starting using them. The first is, you have to remember that you are borrowing this money and you have to repay it. Another important fact is that each month the money you spent is added on to whatever you did not pay from last month. This amount adds up quickly. The better your credit score is means the better deals you can find for a credit card including low interest credit cards.

There are many different credit cards available, so it is important that you know the details about them before you pick one. You can easily compare credit cards online. Some credit cards have an annual fee, but many do not. An annual fee is a fee that you pay once a year for the credit card company to allow you to use their card. Some annual fees are incredibly high, as much as $300 or more. Some annual fees are low, around $20.

What Is Interest And How Does It Work?

Understanding interest rates and payments for your credit card is one of the most important things that you can do for yourself. Just about every credit card has some type of interest rate. Each one offers something different to each credit cardholder based on their credit score. Some credit cards offer introductory periods of zero percent interest. These periods are not forever but can be as long as 18 months. There are a number of credit cards that offer low interest and I am going to explain why that should be important to you.

There are two types of interest you are charged by the credit card company. One is called simple interest and the other is compound interest. Compound interest is when you pay interest on top of what you owe from being charged interest from the month before. This is how your credit card debt quickly gets out of control. I am going to explain this with numbers so that it may be a little easier for you to understand, but before I do that, I would like to highlight a few things.

Each credit card company decides what they are going to offer you based on your credit score. Credit card interest rates are variable, which means they change. A credit card company can change the interest rate of your credit card at any time. They do this based on your credit score. It is important that you work hard to maintain a high credit score. You can do this by paying all of your bills on time and in the amount that is due. You can also do this by working hard to keep your credit card balances low.

If you need help to find potential lenders and best credit cards, maybe we can help you. For example, our partner Fiona may offer credit card options based on your credit rating and the purpose of the card.

Back to the point, which is how interest charges work against you. These numbers are for explanation purposes only. They are not a reflection of what you may see in real life with your credit cards. I am only trying to help you understand how interest works.

Taking the scenario I mentioned earlier where you spent $500 on your credit card, but only paid $300 of it. You still owe $200 and your available balance is $2,800. This means you are charged interest on the $200. Your interest rate is 10 percent. 10 percent of $200 is $20. That $20 is added to your balance due.

$200 (still owed) + $20 (interest charges) = $220 new balance

Your available credit is now $2,780.

So the next month you spent another $300. You now owe $520 and your available credit is $2,480.

When your next bill comes, you owe $520 (remember $20 is interest from the month before).

You pay $320, so you still owe $200, which is charged 10 percent interest.

$200 (still owed) + $20 (interest charges) = $220 new balance

This continues each month that you do not pay off your credit card balance. I have given you an example with low numbers but imagine if it was thousands of dollars how quickly it could get out of control.

I do not believe that there is any card worth paying an annual fee, so I would suggest you find one that does not charge you to use it. However, there are some that offer items such as airline miles and if you travel often, this may save you a lot of money long term and make the annual fee worth it. You need to understand what perks the card gives you and balance if it is worth it.

You should understand that if you do not make your minimum payment, you are charged a fee by the credit card company. That fee can vary from company to company, but most will charge you. If you go over your available balance, the credit card charges you a fee for that, too. Credit companies must disclose all of this information to you, but you have to read the fine print to see it.

Conclusion

You learned a lot in this article about low-interest credit cards. While the interest rate is important, be sure to understand all the information about the cards you are considering. Sometimes, the card with a slightly higher interest rate gives you other perks making it a better card for you. No matter which card you select, make sure you use your credit card wisely and do not get yourself into a debt hole and you cannot dig yourself out.

Compound Interest Definition: The Mathematical Mind Melt

Compound interest- it can be your best friend or your worst enemy. When using it in your savings and investments, it can do a lot for you. When it comes to compound interest on things you owe, such as a loan or credit card, it can overtake your life.

It is even worse when you do not understand it and have no clue how it affects you- or what it even is. Sadly, that is the case with many people. It can be confusing and overwhelming, so we are going to do our best to change that right now.

Compound Interest: A Simple Explanation

To be completely technical, compound interest is defined as “the total amount of principal and interest in future (or Future Value) less Principal amount at present (present value)” with a lovely formula that looks like this:

=[P (1 + i)n-1].

Got that?

If you are part of the normal crowd, it may take a few times- or more- reading that to understand. That’s okay- I am not a huge fan of being technical. It has its place, but really, it is not necessary, so let’s get simple.

Let’s start with the word “compound”. By dictionary definition, compound means “a thing that is composed of two or more separate elements,” “made up or consisting of two or more existing parts or elements,” and- my favorite- “make (something bad) worse; intensify the negative aspects of”.

I like this definition because, even though compound interest is good in savings and investments, it really hurts a lot more people than it helps. In the case of interest, compound means that the interest you owe is going to multiply. Typically, every month you are charged interest on the interest you currently owe, so it just keeps growing until you pay it off. So a simple compound interest definition is that the interest you owe, or are earning through investments, continually stacks on top of the interest from the previous round.

An Example of the Negative Side of Compound Interest

My oldest child will be 18 in a couple of years and, since I homeschool my kiddos, I designed a finance class to teach him as much as I can before he moves out on his own. Just this week, we were discussing credit cards. I do not want to scare him away from them- I just want to be sure he handles them responsible and does not end up in a ton of debt. The following is the scenario I gave him to explain compound interest and how it can wreck your life:

You get an offer for a credit card and apply and get approved for a $100 credit limit. It comes with a 28% interest rate that is compounded monthly. After you spend your $100, you receive a bill at the end of the month that says you owe $128= $100 being what you borrowed and $28 being the interest. You then notice that your minimum payment is only $25.

This is your first time dealing with a credit card, and your check was a little short, so you choose to pay only the minimum payment and feel good that you are responsibly making payments. The next month, your bill comes in and you see that your balance is $131.84. Wait- what? Didn’t you just pay on that? After your last payment, your balance was only $103. And you have not used the card again because you reached your limit last month. How on earth did this happen?

This is what compound interest is. The first month you were only charged interest on what you used. When you paid less than the full balance due, any interest left (in this case, $3) turned into the principle. The following month, that 28% interest is charged on the full $103 you owe. It is not pretty, and it continues to grow. In fact, check out how much it can grow if you continue to make minimum payments only:


Month 2:

Balance Due- $131.84

Minimum Payment- $25

Total After Payment- $106.84

Month 3:

Balance Due- $136.76

Minimum Payment- $25

Total After Payment- $111.76

Month 4:

Balance Due- $143.05

Minimum Payment- $25

Total After Payment- $118.05

Month 5:

Balance Due- $151.10

Minimum Payment- $25

Total After Payment- $126.10

Month 6:

Balance Due- $161.41

Minimum Payment- $25

Total After Payment- $136.41


This is just for six months. Imagine that growing for a year or even a decade. It all seems so simple and innocent in the beginning, but it grows into a monster. Let me point out of few things here to bring home just how crazy this is:

  • Even after paying $25 a month for 6 months, you still owe $136.41.
  • That $25 you have been paying means that you have already paid a total of $150, which is more than you borrowed in the beginning. Do you get that? You have already paid more in interest than you have borrowed. And, yet, you still owe more than you borrowed. That’s nuts! (Yes, that is my technical term for it.)
  • You are paying all of this for $100 that you are really only borrowing one time, and that is the first time. Once you repay it, you are just re-borrowing your payment. What I am saying is that the $100 is only technically loaned to you once, no matter how many times you borrow it or how often you repay it.

How Compound Interest Really Gets Out of Hand

You may have looked at the first few months of my example and thought, “Well, that’s really not so bad. I would still owe under $200.” You are correct- it does not seem so bad. The first few months, though, are not normally what gets people in the most trouble. It is when they wait years to pay it off.

“But why would anyone wait that long?” you might be wondering. Well, here’s a question or two for you to consider: How many times have you gotten sick and missed work? How many times has a surprise bill or emergency popped up and thrown off your monthly budget?

You see, it is not always a conscious decision for people not to pay their credit card balance every month- life happens, and sometimes there is nothing we can do about it. There is also the fact that not everyone understands how this interest works, so they have no clue how out of hand it can be. There are other times that extenuating circumstances make it impossible.

How Do I Avoid Compound Interest?

I hope we can all agree that owing any bill that involves compound interest is not a good thing, so of course we should avoid it as much as possible. Here are a few ways to do that:

Avoid Credit Cards Completely

Let me start by saying that credit cards are not the only thing that charges compound interest, but they are the most common, so we are mostly sticking with those through this explanation. As long as you understand compound interest with credit cards, you can translate that knowledge into other loan types.

Now, one of the best ways to avoid compound interest is to avoid credit cards. If you do not use credit cards, you are avoiding a good bit of compound interest. However, avoiding credit cards completely is not always the best step.

Even with compound interest, there are benefits to credit cards.

1. They are great for emergencies.

If you end up on the side of the road with a flat tire and no cash, or if your kid needs medicine and you do not get paid for a few days, a credit card is a lifesaver. Understand though that it can only save you if you have money available there. If you have used up your limit, that card is doing nothing more than taking up space in your wallet.

2. They can help you build credit.

Credit cards are great for building credit when handled responsibly. Just having a card open and not using it or paying your full balance every month improves your credit utilization- a big factor in your credit score. Having a balance of more than 30% of your credit limit can mess you up, though, so you have to be careful.

3. There are some things that simply require a credit card.

Some purchases, hotel, and rental car reservations, and more require that you have a credit card. More often than not, this can be covered with a debit card through your bank, though. It really just depends on the company you are trying to do business with.

Compare Credit Cards

Okay, so if avoiding credit cards is not always the best solution, the next step is to really- and I mean really- compare credit cards and credit card interest rates before you get them. You want to find the cards with the lowest interest rates. The lower the interest rate, the lower the amount of compound interest you can expect to pay.

Understand the Cards You Have

Reading the fine print is never fun, but it is extremely necessary, especially when it comes to anything financial. In that fine print, credit card companies spell out- often in very technical terms- how they charge you interest, how often it is compounded, what happens when you do not pay, any additional fees they charge, and so on. The key to avoiding interest lies in the information you can learn from that fine print. The better you know how your credit card company operates, the better you can manage your card.

Choose Another Option

Avoiding credit cards may not always be the answer, but using them is not always the right answer, either. Credit cards are better for short term purchases. For instance, if you need gas to get back and forth to work and you get paid at the end of the week, using a credit card is not so bad- if you repay the money you use on payday. If your little one is using more diapers than usual and you are down to your last one, using $20 to get a new pack with a credit card is probably okay- again, if you repay that amount as soon as you get paid.

However, if you are in need of more money for a longer period of time, you should look into other options. Let’s say you missed a week of work thanks to being sick and you now need to find $300 to keep your electricity on. Unless you can absolutely pay back that $300 before the close of the billing cycle when interest is charged, you should probably put that card right back in your wallet.

In times like these, you are usually better off seeking a personal installment loan. Why? Well, these handy things typically come with fixed interest that is calculated up front and spread out with payments. Using the $300 for the electric bill, let’s compare a fixed-rate installment loan and credit card with compound interest with the same interest rate of 25% (Do note that most installment loans have lower interest rates, but this example is meant to show the difference):

A. Credit Card With Compound Interest

Principle- $300

Total with Interest- $375

Minimum Payment- $25

If you only pay that minimum balance, you will still owe $350. The next bill you get will show a total balance of $437.50. As you saw in the other example of the credit card, that number just keeps growing. Within a year, your balance can end up over $1,000 for just borrowing $300. That’s no bueno, in my opinion.

B. Personal Installment Loan With Fixed Interest

With a personal installment loan, you have a repayment term. We will use one year for this example:

Principle- $300

Total with Interest- $375

Monthly Payments- $31.25 for 12 months

At the end of the repayment term with the personal installment loan- so long as you have made all of your payments- your loan is paid off. Do you see the difference? With the credit card, your minimum monthly payment is nearly the same as the installment loan’s monthly payments, but you are just spinning your wheels with the credit card. Literally, it’s like your car being stuck in the mud. You keep pushing the gas and spinning the wheels, but you are just digging yourself further.

With the installment loan, every single payment you make is getting you closer to the finish line, saving you hundreds or even thousands of dollars.

For the sake of transparency, I feel obliged to point out that installment loans come in different shapes and sizes. Interest rates, repayment terms, and even fees associated with them change from lender to lender and loan to loan. A lot of factors are taken into consideration, including your credit and income. However, an installment loan is almost always a cheaper option when you need to borrow larger amounts of money that you cannot immediately repay.

You may now be wondering why you should not just get an installment loan each time, but these loans typically do not come in tiny increments. This means that unless you need the full amount of the loan, you are putting yourself into unnecessary debt.

Pay Your Bill

The final way to avoid compound interest is to pay your bill in full and on time each month. As long as you are making your payments every month and have a $0 balance when you are done, interest does not have the chance to build on top of itself.

If you are thinking something like, “Yeah, that’s easy for you to say. I don’t have that kind of money lying around,” I know how you feel, but this is a bad way of thinking because you are missing a very important fact: You can re-borrow that money. In fact, if you work it right, you can not only avoid compound interest but interest altogether. And, I’m going to tell you how to do it.

First, you need to make sure that your interest is calculated and added monthly, not daily.

If you are charged interest on your daily balance, this particular “trick” will not work. However, if you are only charged interest at the end of the billing cycle, I’ve got you covered.

Okay, let’s say you use $100 of your credit limit. Your interest is charged monthly and the end of your billing cycle is the 20th(this information will be in the fine print that I mentioned), you get paid on the 18th. On payday, go ahead and pay your full balance with interest, leaving you owing $0. When the interest is calculated on the 20th, you owe nothing, so there is no interest to add.

On the 22nd, when your water bill is due, you can use your card to pay for it. Then, on your check that comes right before the 20thof the next month, pay the full amount again. This habit can help you in so many ways:

  1. You will not have to pay interest.
  2. You do not have to worry about that interest piling up.
  3. Your credit utilization points on your credit is going to look awesome.
  4. You will probably get an increase in credit limit and maybe even new and better credit card offers. To be fair, a higher credit limit and new cards can either help or hurt you. As long as you keep up this payment habit, though, it will be fine.

An Example of the Positive Side of Compound Interest

At the beginning of this, I said that compound interest could be good for you in some cases. It seems only fair I explain that a little farther. It is really the same basic thing as owing compound interest, but it is reversed.

There are some investment accounts that offer compound interest, such as bank accounts and bonds. Bank accounts that pay interest though are typically going to be savings accounts, not checking accounts. It is rare for a checking account to pay interest. Savings accounts, on the other hand, usually give 1% to 2% interest. They often offer the lowest interest, but there are other investment accounts that earn more.

For the sake of simplicity, though, we will say that you have deposited $100 into a savings account with a 2% interest rate that is compounded monthly. If you did not add any more money, this is how your account would grow:


Month 1:

Starting Balance- $100

Interest Earned- $2

Total w/ Interest- $102

Month 2:

Starting Balance- $102

Interest Earned- $2.04

Total w/ Interest- $104.04

Month 3:

Starting Balance- $104.04

Interest Earned- $2.08

Total w/ Interest- $106.12


This growth would continue as long as the money stayed there. Additionally, if you add were to save $100 each month, it would grow exponentially.

You probably noticed that you gain interest at a much slower rate than you get charged interest. Unfortunately, this is the nature of the game. To earn more, you need to look for someone to invest your money that offers more interest. Also, there are investments and savings accounts that compound daily instead of monthly meaning you have the potential to earn more quickly. Again, it is important to read the fine print so you can compare your options wisely.

Though this article focuses mostly on the downside of compound interest, you can also use it to grow your savings and your retirement fund. The keys to both saving and earning money with compound interest lie in educating yourself, making wise decisions, and handling it all responsibly.

Conclusion

Compound interest can be a powerful thing, whether you are using it to build your life or it is tearing your finances apart. It is important to always keep in mind that it has the ability to impact your life both positively and negatively, so you have to pay attention to the choices you make and the actions you take.

If you are currently in trouble thanks to compound interest and credit cards, you may not see any hope, but don’t give up. You might consider getting one of those personal installment loans we talked about earlier to pay off your credit card debt. Doing so will rid you of that pesky compound interest and allow you to pay off the debt over time. If you do this, though, make sure you put those credit cards away so you do not end up in another hole.

 

Balance Transfer Credit Cards to Keep You Balanced

A great mind once said, “The handy thing about credit cards is they’re a great way to pay off your credit cards.” We have no idea who said it but we can all agree it turns out to be very true. No wonder why it’s quoted so much. But let’s see how balance transfer credit cards fit into this nice quote and how you can use them to figure out your credit card debt.

Balance Transfer Credit Cards Defined

A balance transfer credit card allows you to transfer existing credit card or loan balances to another credit card. Typically, you include the financial details of the credit card or loan balance you want to consolidate or transfer, such as the account number(s), financial institution and transfer amount.

Along with the interest rate and potential fees, you will also need to examine the end date for the promotional period, potential rewards, cash back options, annual fee amounts and any sign-up bonuses. The ideal balance transfer credit card provides a promotional period long enough to enable you to pay off your transferred balance under the zero percent interest rate. Once the regular interest rate begins, you need to already have the transferred balance paid off. If the post-promotional interest rate is high, especially higher than your current credit card, you really need to pay that sucker off before the promotional period ends.

Credit Card Comparison: Balance Transfer Credit Cards

Let’s assume you need a balance transfer card because you only owe $1,000, but the 23 percent interest rate you got because of your poor credit rating adds way too much to the principal. You can compare credit cards on Loanry to find the best balance transfer credit cards for you.

You really need to shop around for the right balance transfer credit card to pay you’re your high-interest debt. And you must pay attention to the details to ensure you fully qualify for a promotional interest rate, plus you understand the terms you must meet to keep the promotional interest rate.

Read the fine print. Balance transfer credit cards typically have some fees attached and they may not turn out to be as cheap as you first think.

Consolidation Loans vs. Balance Transfer Credit Cards

That fact can also be true, but you have to do it right. Sometimes, you waffle between using personal loan consolidation and using balance transfer credit cards to decrease the amount you owe to credit card companies. Either of those options can reduce the principal owed, but consolidation loans tend to do it more quickly.

A consolidation loan lets you pay off all the original creditors, while negotiating a lower interest rate. It provides the funds to pay off all of the original creditors and leaves you with only one payment per month. While many credit cards in your wallet may have interest rates approaching or greater than 20 percent, you can typically land a consolidation loan with a reasonable interest rate of 10 to 15 percent.

The downside of these loans is that they tend to require a large debt for you to qualify. If you only owe two or three thousand dollars, balance transfer credit cards make a better choice. You might not get the same amazing interest rate, but you can do pretty well, plus you may land a six- to twelve-month zero interest rate.

The Balance Transfer Credit Cards Cycle Trap

I’m going to be honest with you speaking as somebody who in undergraduate opened about five or six credit cards and tried everything to pay them off. My first option was third job. My second option was balance transfer credit cards. And my third option was a consolidation loan. I’m happy to speak to you from experience that the combination of the three things worked. It took a few years, but it all got paid off and I now love living life with no credit cards. Yes, I am serious. I am also the only person I know who has none.

The danger of using balance transfer credit cards is that if something goes wrong and you cannot pay off the transferred balance, you either get stuck with a ridiculously high interest rate after the promotional period and existing debt or you have to take out another balance transfer credit card to send the balance to so you can get another zero percent interest rate to extend your payback.

I ended up with two balance transfer cards after the third job did not help me enough to kill off my original balance. I was really determined to live life debt free though. While it took consolidating my accounts to pay them off, you can benefit from my mistakes. Trust me on this one, when you see your initial credit card balance growing, either take another job so you earn more to pay it off or get the balance transfer credit card right then. Do whatever it takes to pay the sucker off on the very first promotional period. Do not add to the balance of either card. Transfer the balance and stop using the original card. Do not add to the new card either.

The trick of getting out the debt hole is to stop using credit. Live within your means. The definition of “your means” is the amount you earn each month plus your savings, your investments’ dividends and the amount in your checking. That needs to cover all of your expenses – your monthly budgeted items and the little extras like vacation.

Using balance transfer credit cards can help you get to the point of paying everything off, but you have to use them judiciously.

Obtaining Balance Transfer Credit Cards

If you get approved for the balance transfer credit card, the new bank or financial institution takes care of transferring the credit card balance to your new credit card. Other banks have you phone them or go on the Internet to transfer your balance after you receive the new credit card. You might get approved for an amount lower than the balance of the original credit card. If that occurs, you will only be able to transfer part of that debt.

Buyer Beware: Not all credit cards allow balance transfers. Carefully read the credit card offer.

Caveats of Balance Transfer Credit Cards

Many of these balance transfer credit cards include fees for using the balance transfer option. Typically, this fee gets automatically added to your balance when you transfer it. Other lenders add the fee after 60 days or more have passed. The lower the fee, the better. These fees usually range between three to five percent of your transferred balance.

Most lenders limit the transfer amount. This caps the transfer balance amount and generally ranges between $5,000 to $15,000. Most cards only let you transfer a balance once when you first obtain the card. A few let you add new credit card transfers later.

One of the qualifying items for obtaining these cards is you need to be up on your payments to the other cards. If you get behind on payments to another card, you probably won’t get a balance transfer credit card.

Even if your credit card offers cash back and/or rewards, you won’t earn these on balances you’ve transferred. Those only occur when you make new charges or purchases (which you really do not want to do).

Also, just so you know, you usually can’t open a balance transfer credit card with the same lender with which you have a different credit card. These are a little tough to qualify for since you typically need a credit score of more than 700 and timely payments.

There’s also the time factor. You can get a consolidation loan much faster. A balance transfer credit card can take days to weeks to process the transfer. You need to continue making your timely monthly payments on the existing credit card until it shows a zero balance, meaning that the transfer to the new card occurred. You need to make all payments on time. Carefully monitor your billing statements.

You really must make all of your payments on time because some lenders cancel your whole balance transfer agreement if you make a late payment.

Do not make purchases on the new balance transfer credit cards.

You need to quickly pay off the transferred balance. Adding new purchases just gives you more to pay off. Back to living within your means. You have to learn to do that. Create a budget. Stick to it. How do you do that you ask?

Budgeting and Balance Transfer Credit Cards

You need a budget. This was a major key step for me to eradicate many credit card bills. You first gather pertinent information so you can calculate your monthly income.

Use hard numbers. Include your main salary or wage job and any side gig income. Factor in money from completing surveys, doing odd jobs, etc.

Do not guess. Calculate a mathematical estimate. Use logical numbers that you have past experience earning. No assumptions. Do the math, so you can actually know what you have coming into your bank account. Budget on an average of your income of twelve months.

Here’s a tiny warning. The next step hurts. Calculate your monthly expenses. You will probably be really shocked when you actually write down every single, solitary thing you spend money on in a calendar month.

Start with your rent or mortgage payment. Add your utilities – electric, gas, water, trash, – car payment, car insurance, gas, groceries, motor oil, fitness center membership, cable or satellite, cell phone, dining out, credit cards, loans and savings. Haul out your checkbook, PayPal account statements, credit card statements and bank statements to examine closely where you spent your money for an entire twelve month period.

You do this both to create an accurate set of expenses and to catch the one or two semi-annual or annual expenses you have. You may pay a mortgage every month, but your property taxes and property owner’s association dues once per year.

Depending on your personal situation, you may have more than the above expenses to include, such as:

  • clothes,
  • school supplies,
  • household sundries like lightbulbs and cleaning materials,
  • pet supplies and pet care,
  • home or car repairs and maintenance,
  • medical and dental bills,
  • online purchases/shopping,
  • entertainment,
  • online subscriptions,
  • child support and alimony,
  • your children’s allowances,
  • gifts for birthdays, holidays and weddings,
  • church tithes and charity donations.

The next fun part is prioritizing your expenses. You need to divide things into categories that divide expenses into negotiable and non-negotiable expenses. One Budgetry writer suggests these for “Non-Negotiables”:

  1. rent and car payments,
  2. credit cards and utilities.

Things like groceries, gas, clothing and savings fall into the “important” category. You really cannot do without them, but if you had to you could totally reduce them or cut them out except food. You could walk to work and errands. Certainly no person needs new clothes every month. You do need to save money every month, but if you had to miss a month, you could.

The optional category is full of things people think that they really need, but you could absolutely do without. These include cable or satellite television, high-speed Internet and their cell phone plan. You can cut the cord to TV and choose between high-speed Internet and the cell phone with a data plan. Pre-paid plans typically cost less. The completely negotiable, therefore unneeded, items include entertainment and shopping. You do need to have money set aside for medical expenses and repairs to your car or home.

Your credit cards qualify as non-negotiable because you have to make at least the minimum payments each month in order to keep your credit score healthy. You need to make the higher than minimum payments when possible. Only by doing this will you ever qualify for a balance transfer credit card to help eradicate your debt.

Reducing Your Expenses

Trust me, if you have hit the point where you actually need a balance transfer credit card, you have hit the point that you need to reduce your expenses. You need to prioritize expenses to dig yourself out of that hole. You might have to cut things out that you currently purchase. That does not mean doing without. It means cutting down on your consumption of the item or replacing it with something else. Try these ideas to save money.

I admit to a total love of Starbucks and an affinity for pumpkin spice lattes. (Not one word about how basic that seems.) I could drink one a day. That would cost about $35 per week. However, the sweet folks at Starbucks released pumpkin spice latte K-cups this year. I bought those suckers and yum. A pack of nine or 18 costs a tiny fraction of the coffee shop version. The taste is the same, but a nine pack costs $11.99. That shaves off $23 per week. Look at that $100 I freed up in my monthly budget.

Save on ATM fees by pulling out cash at bank. Visit the teller window.

Cut the cord to your cable or satellite TV plan. At least reduce your plan level. Make a complete list of every show you watched all the way through for one week. No cheating. You have to watch it start to finish. Now, make a list of the channels on which those shows played. It is probably five or less.

Check the list of plans your provider offers. You can probably reduce the tier of service to which you subscribe. You’ll save about $20 typically.

Okay, if you like one of the premium channels like HBO, you can still reduce your tier and still watch it. You just purchase HBO online as a standalone station. You stream your shows on your TV, computer and tablet. It costs $14.95 per month.

You could cut the cord totally and use the free version of Vudu and $5.95 per month Hulu to access a multitude of entertainment options. Other options include Amazon Prime Video or Netflix. You save about $50 per month.

Switch to a more reasonable cell phone plan. Shop around for a new carrier, especially if you have a pre-paid plan or your contract expiration is coming up. You can stick with your carrier, but study all of the plans offered. You can typically reduce only the amount of high-speed. That could save you about $20 per month.

How to cut back on various types of expenses

Budgeting the Balance Transfer Credit Cards

This is not the same thing as budgeting your expenses every month. You need to budget the card’s payments all the way through the repayment. Do this for each card you examine before applying for any.

Credit card interest rates and the promotional period can make all the difference. One card may give you a six month zero interest period, then transition to a 15 percent interest rate. Another card might give you a one year zero interest rate, but jump to a 25 percent interest rate afterward. You need to determine which one actually costs you less and how much the card will cost you each month. Also, calculate the transfer fee on each and add that to it. You will find the best balance transfer credit cards this way.

Also, examine the pay off costs of a regular credit card with that has a lower ongoing interest rate. That could turn out to be the least cost scenario.

Other Reasons to Obtain Balance Transfer Credit Cards

Growing debt isn’t the only reason to obtain a transfer balance credit card. You may have grown unhappy with your current credit card company. Before 2009, your credit card company could spring changes on you randomly. They could raise your interest rates or tack on fees or something else, but in May of 2009, Congress passed the Credit Card Accountability, Responsibility and Disclosure Act. Now, your card issuer has to provide 45 days advance notice before it can increase your rate, fees or make any other significant change. Their notice provides you the option to cancel the card. You might also decide to keep it or to transfer the balance to balance transfer credit card.

But, wait. There’s more. One of the five most common situations for choosing balance transfer credit card might fit you.

  • You typically pay your balance in full, but currently cannot. The introductory period of the zero percent interest rate saves you being charged interest while you change your income.
  • You always carry a balance. Zero or low-interest lets you save money.
  • Or you need a rewards card that lets you earn cash back on new purchases. You could land a card that offers you the world.
  • You carry a balance on multiple credit cards and want to consolidate your debts. This is very common and works if you have a small amount you owe to credit cards.
  • You want to improve your credit score. You can improve your credit utilization ratio quickly by transferring the balance to a new card.

Balance Transfer Credit Cards for Those with Bad Credit

Here’s the truth. If you have a low credit score, let’s say of 580 or less, you probably won’t get a balance transfer credit card.

The exception is if you have defaulted on an existing credit card and that lender wants to bribe you into paying them. They will offer a temporary lower interest rate on a new credit card and transfer the balance onto it with a hefty fee. The card typically starts out with no available credit. You must make your payments on time and more than the minimum monthly payment to pay it off. The only way to ever access the full amount of available credit on these cards is to pay off the original debt.

You also may luck out and find a secured credit card that you can obtain with bad credit. Some lenders let you provide a security deposit of $200 to $300 in order to obtain twice that amount. You will still have a maximum credit limit and it will not exceed what your credit score’s maximum would signify it should.

If you file for bankruptcy, it will take seven years for it to fall off of your records. During that time, you will find it hard to get any credit card or loan at all. If you have a debt that you could not include in your bankruptcy and were hoping to get a balance transfer credit card to reduce it, this is unlikely.

Using Loanry to Find Balance Transfer Credit Cards

You could consult an online credit card comparison chart, but instead, why not obtain results tailored to your needs? Visit Loanry.com to fill out a short form that provides your name, location and last four digits of your Social Security Number. You’ll get back a list of potential lenders that suit your situation and credit score. You can save time and protect your credit score using this method. It does not create a hard hit to your credit report, so you are left to apply for your credit cards from the lenders that offer you the best chance at approval.

Final Thoughts

If you’ve considered refinancing your credit cards and loans using consolidation loans and it does not fit your situation, try balance transfer credit cards. You can find a credit card that lets you transfer the balance of one or more other cards and/or loans to a single, low-interest rate credit card. Some of these may have zero interest rates for a promotional period. Nab one if you can and if you genuinely need it. To keep your credit situation healthy, you should never simply take out a loan or credit card just because you can. Manage your credit wisely. This builds the best credit score.

Credit Cards for Fair Credit: Swipe Here

Credit cards can be excellent tools when handled responsibly. If you have been thinking about obtaining a credit card but are afraid you will be turned down due to your fair credit score, we have good news: there is a card out there for pretty much anyone. Fair credit may not be the best, but you can still find a credit card to help you meet your goals. This information should help you with your search.

What is Fair Credit?

If you are looking into credit, there is a chance that you have heard of more than one type of credit score: a FICO score and a Vantage score. While lenders vary, the most commonly used and well-known credit scores are FICO scores. These usually range from 300 to 850. The following is how these scores are viewed:

  • 300- 579- Very Poor
  • 580- 669- Fair
  • 670- 739- Good
  • 740- 799- Very Good
  • 800- 850- Exceptional

Approximately 17% of Americans fit in the Fair category. A full 33% of Americans fall into either the Very Poor or Fair credit. If you have fair credit, you are most definitely not alone. The good news is that fair credit still gets some opportunities; so if you are looking for credit cards for fair credit, do not despair. There is hope.

Breakdown of a Credit Score

It is important to know exactly what goes into your credit score, so let’s break it down:


-35% of your FICO score is your payment history.

-30% of it is how much you owe.

-15% of your score depends on the length of credit history.

-10% involves any new credit you have opened.

-10% is about your credit mix- or the different types of credit you have used.


Note that the two biggest factors include your payment history and the total you owe. Though you should work on your credit as a whole, these two sections are a great place to start. As we will go over in this article, you should always try to keep your payment history looking as good as possible. Pay what you owe on time as much as you can. Try not to be a bit late.

Then, pay off as much as you can. The less you owe, the better your credit score will be. Make a repayment plan, even if you can only pay $5 on a debt each month. Try picking up extra shifts or a side hustle to pay it off quicker.

Opening new credit cards can help, too. First, by lowering your credit utilization, then by adding more to your credit mix and putting a little more activity on your credit. Even if your credit is less than desirable at the moment, by following the tips listed here, you can increase your score for the future.

What is the Difference in Credit Cards for Fair Credit vs. Other Credit?

Credit cards are basically the same. They are simply avenues of borrowing money. The difference comes in the terms that come with each credit card. Credit cards for good credit will have much more favorable terms than credit cards for fair credit, though credit cards for fair credit will have more favorable terms than those for poor credit. These terms will include things such as your interest rate and available credit limit.

Things to Know When Shopping for Credit Cards for Fair Credit

Anytime you are getting ready to make a move, especially in your finances, you need to be educated about what you will face. When you are shopping for credit cards for fair credit, there are quite a few facts you should be aware of.

Different Types of Credit Cards for Fair Credit

Some credit cards for fair credit will require that you put up collateral, typically in the form of a deposit. These are called secured cards, and they may require deposits as low as $39, or they may require a deposit in the full amount of your credit limit. As long as you make your payments on time, most companies refund this deposit after a certain amount of payments.

Interest Rates

Most credit cards for fair credit will come with pretty high-interest rates. You cannot really control these rates. They are, unfortunately, one of the major downsides to having lower credit scores. Over time, if you handle your credit card responsibly, you should find opportunities for cards with lower credit card interest rates. Sadly, when your credit is less than stellar, you will have to start out closer to the bottom and work your way up.

Credit card interest rate statistics

Credit Limit

Credit cards for fair credit will likely not have very high credit limits. While it will really depend on the credit card company, it is usually best not to expect more than a couple or a few hundred. Most companies will increase your limit over time if you make timely payments, but the lower your credit score, the lower your initial credit limit.

Fees

Some credit card companies will charge annual fees. These fees can range in price, and sometimes make the card not worth it. As you compare credit cards, make sure you know what- if any- annual fees you will be paying and if there are any benefits to paying those fees. There are usually other fees, too. These can include anything from a paper statement fee to a late fee.

Fees Credit Card Companies Don’t Want You to Know

Credit Card Perks

When you are credit card shopping, you have to watch out for the advertised perks. It is very common for people to fall for credit cards with high fees or high-interest rates due to the perks that come with them. The perks themselves are not necessarily bad things, though. The problems come due to the following people sign up for the perks that they never use.

I have actually known people to sign up for credit cards for airline miles. This would not be a bad thing except that these particular people never- and I do mean never- fly. When I asked one of them why they signed up, she said, “Well, so they’ll be there if I ever decide to use them.”

Basically, she paid a crazy annual fee for something she knew she would probably never use. She would have been better off putting that annual fee in a savings account or investment account every year. If she ever did decide to go somewhere, she could easily pay for her plane ticket with that money, or she would have it for something she actually would use. Do not fall for credit cards just for the perks unless the perks are something you already use. Earning cash back on groceries or gas, for instance, would be worth it for many people- unless, of course, you never drive and always eat out.

Where to Find Credit Cards for Fair Credit

Credit cards seem to be available everywhere now, but finding the one that is right for your credit and your life is not always a walk in the park. It is very important to compare multiple credit cards to get the best terms and interest rates. Especially when you have fair credit. Without shopping are for credit card interest rates and terms, you could end up with a card that does you a lot more harm than good.

The best way thing to do is to buy credit card online. Through the Internet, you can compare multiple cards at once. In fact, you can even start your search with your personal criteria, such as your credit score. Shopping credit cards for fair credit online will save you a ton of time. And most likely show you some options you would not find out about otherwise. You just might be surprised by what you find.

How Can I Improve My Credit to Get a Better Credit Card?

One of the great things about credit is that it can always be improved. One of the great things about credit cards is that they can be used to fix credit. If this is what you are aiming for so that you can get better credit cards or a home, or even if you want to just keep your good credit, here are some steps to take:

Be Responsible

The biggest thing to remember is to be responsible with the credit card. Do not overspend. Spending more than you can repay is the exact step you should take if you want to be in debt and destroy your credit. Otherwise, be sure you only charge what you can repay.

The first step to following through on this is determining how much you can afford to repay. A good rule of thumb is to not charge anything that was not already coming out of your check. If you were not planning to buy an $800 smartphone this weekend out of your weekly paycheck, do not purchase it with your credit card. In other words, do not just go crazy and spend it because it is available.

Large Purchases

At the same time, credit cards can be useful for larger purchases- if you plan and prepare correctly. Here is the thing about credit cards: they are similar to mortgages and auto loans in that they can help you get things you cannot normally afford all at once. You have to remember, though, that they are also like mortgages and auto loans in the fact that you will be paying back more than you borrow. Interest is going to be added, so you have to really think it through.

When it comes to a mortgage, most people are more than willing to pay interest because they are getting to purchase a home- something that most people cannot do without a loan. I want to purchase a home for my family, something that we can all enjoy, and that my kids and grandkids (when I have some) can come to visit. A home is part of my dream, so paying interest to purchase a home is worth it to me.

The same thing can be said for cars. For those who really need or want a new car, paying interest on an auto loan is worth it completely. These people will happily work harder to pay the interest because what they get in return is worth the cost they pay.

When it comes to your credit card, you have to look at it the same way. Is the item you want to charge worth paying interest on until you pay it off? For instance, if you were considering purchasing that $800 cell phone I mentioned a moment ago, will you be willing to pay out extra each month to have it? Or would it be better to pick up a few extra shifts at work to pay for it outright?

This decision really comes down to you. You will be the one paying the bill, so only you can decide what is worth the money. Your priorities can help you make these decisions. I, personally, would not put a TV on my credit card, but if one of my kids asked for a really special gift on their birthday, I might consider it- if I have not saved enough for the gift.

Other people might value a TV because that is what their family sits around on Saturdays to watch movies for family night. As I said, the choice of what to charge is completely up to the cardholder. You just have to decide what you are willing to pay extra for.

Emergencies

Credit cards can be great tools during emergencies if you have any room left on your card. If you have a card that is specifically for emergencies, normally, you should leave it alone. However, if you were only able to get credit cards for fair credit, you may currently be stuck with a $200 or $300 credit limit. What happens if you have a $700 emergency?

While you do want to be very careful with your emergency credit card so it is available when you need it, you also need to put some activity on it so that you can increase your credit limit. Try just using it for $20 worth of gas once or twice a month and pay it off quickly. Definitely do not use your emergency card for shopping, just for some small charges and repayments that make you look like a responsible cardholder.

Pay Your Bill On Time or Early

Do not be late. I repeat, do not be late with your payment. Late payments can affect your credit more than you will ever know. Be on time with your payment, or early if you can. It can be hard sometimes when you are broke or struggling, but it is possible. Let me tell you my “secret” of paying early.

A couple of years, I was offered a credit card from my bank. It was nothing overwhelming- just a $200 card. After some thought, I went for it. We were also broke at the time, so interest rates were not something I could afford, but I wanted to build up my credit a bit. So, I sat down and formulated a plan to keep away from interest and still be able to utilize the card while making early payments.

I knew that the $200 limit would cover a particular bill every month. And I knew that my utility bill was due four days after the close of my card billing cycle and that the credit card bill was due right in between the two. So I would use my check that came directly before my credit card bill was due, which was the same check I would normally pay my utility bill with.

I would pay the entire $200 on my credit card bill, at minimum, two days before the billing cycle closed. If the funds were in my bank, I would pay it a few days earlier. Since interest was charged at the end of the billing cycle, I avoided having to pay any since my balance was zero. As soon as the billing cycle closed, I would use my card to pay my utility bill.

With this system, my bill got paid every month either on time or early and I avoided interest. Sometimes, I would do it twice a month to increase my credit card activity. All of this drove my credit up and a few months later, I got a credit increase to $500. I did not go crazy and blow it though. Instead, I continued the same system but added a bill to the mix. I also left at least $100 completely alone just in case of an emergency.

I hope you can see that it can be pretty easy to take care of your bill with a little planning and some type of income. If you want to follow my system, it is important to do a few things. First, make sure your credit card does not charge interest until the end of the billing cycle. And you should definitely know when the end of the billing cycle is. Second, figure out which of your checks will come every month prior to the end of the cycle, and be sure you budget your credit card bill into that check.

Pay More Than What is Due

When you receive your credit card bill, it will tell you a minimum amount to pay. It can be very tempting to only pay that amount when you are broke. The problem is that paying that amount is only going to help you for that moment. Typically, that minimum amount is not even enough to cover the interest you owe.

That means that the next month, you will get charged interest on your purchases and the remainder of your prior month’s interest. Every month, you will get charged interest on your interest. What was once a $200 credit card can quickly increase to thousands of dollars. As long as you are making those minimum payments, the credit card company will continue to let your balance grow.

And that, my friends, is how so many people end up in crazy amounts of credit card debt. I promise, it is not what you want to go through, so pay more than is due every month. If you can follow the system I mentioned above, this will not be an issue for you.

Pick a Good Due Date

Many credit card companies will now let you choose your due date. Try to find a company that gives you this option. Then, before you choose a date, consider which check of the month will be the easiest to make your payment from.

Protect Your Credit Card

While there are many ways to mess up your credit, the easiest way seems to be when someone else gets access to it. It does not require an experienced hacker to steal your identity. It only takes them seeing your card, or picking it up off of the ground. A person can make all kinds of purchases online with nothing but your credit card information. Keep it safe at all times. If you notice that it is missing, you can freeze it until you find it. It may just be in the wrong pocket of your wallet, but it might also be in the hands of a dishonest person.

Protect your credit card

Conclusion

While fair credit may sound unappealing, it does not have to be. It also does not have to keep you from building a better financial life for yourself. There are lenders and credit card companies all over the place now. Some of them work specifically with lower credit scores to help those people build their credit.

If you have fair credit, do not just sit around and wait for your score to go up on its own. There is a credit card out there that can help you increase your score and build up your credit. With some patience, determination, and some work, you can find a great credit card for your current financial situation that can help you build a better one.

Fees Credit Card Companies Don’t Want You to Know

Credit cards can be one of the most helpful and convenient things. They can handle emergencies and other unexpected expenses, gas and necessities in between checks, and more. The question is whether or not those nifty little pieces of plastic are worth the cost. Even more important: do you actually know what your credit card costs you? Let’s take a look.

The Price of Credit Cards

There would be a lot of financial stress off of people if the $20 they charge for pizza would only cost that same $20 to pay off. Unfortunately, that is so not the case. At the same time, though, if that were the case, credit cards probably would not exist. Why not? Because there would be no incentive to loan the money to us.

At their most basic, credit cards are simply loans. Credit card companies loan you money and you repay them- with some extra, of course, as a sort of fee to let you borrow that money. So paying a little extra to borrow that money is not so bad. If we pay the fees, we keep getting to borrow the money.

Here’s the thing, though: you do not have to pay as much as some credit card companies want you to. To pay as little as possible, there are some things you need to know and pay attention to- things that credit card companies would rather you did not know. (Hey, pssst, we are going to tell you anyway.) There are two big things to look out for: interest rates and fees. Let’s break them down.

Interest Rates

The most commonly known extra added onto a credit card bill is the interest rate. This is the very basic, “I loan you this money, this is how much you owe me back since I let you borrow it.” It is just like a loan in that sense.

There are a couple of good things about credit card interest rates. First, you know how much that interest rate is prior to taking out the card. When you apply for a card, they will inform you about the interest rate. Cards with a fixed interest rate will continue to charge that same rate. Some, though, may have adjustable rates. This means you can expect a fluctuating interest rate. Again, though, they will inform you of the type of interest rate you are looking at up front.

Another awesome thing is that if you repay what you borrow before the close of the billing cycle, some companies will not charge interest. This gives borrowers a chance to get out of debt before it grows. If at all possible, pay your entire bill every month before the interest is tacked on. If you cannot, pay as much as you can so you will at least be knocking your debt down.

Beware Intro Interest Rates

Introductory interest rates can be awesome- especially if you get one with a very low or 0% interest rate. The problem? That introductory period comes to an end at some point. It is imperative that you know when that point is. Put it on your wall calendar, in your Google calendar, write it on your forehead if you must- just do not overlook it.

Otherwise, you might go out and put $1,000 on your card right after your intro period ends and you suddenly get a bill for $1,360. You might stare at the bill in silence, scream, freak out, or pass out, but nothing changes the fact that your interest rate suddenly jumped from 0% to 36%. Do not let the date sneak up on you.

When you notice the date is approaching, you have a few options. First, consider giving your credit card company a call to renegotiate your interest rate. There is no guarantee that it will work, but if they fear they might lose you as a customer, it is possible. It really never hurts to check.
Another option is to look for another card with a good introductory rate. You should not have a problem locating another one at all. This is because credit card companies all over will do what they can to attract more customers.

You might also keep your current card put away for extreme- like really, really extreme dire straits. However, if you are sure that you will no longer use it at all, close the account. If you do not and that credit card company charges any fees, you may still get a bill.

Credit Card Fees

Now, let’s get into the less well known credit card fees. Not every card will charge all of these fees, but you need to know what to look out for. Here are some of the common credit card fees.

Late Fees

Just as every other bill has a habit of adding on pesky late fees, so do credit card companies. While these late fees may vary slightly, the most common late fee that I have seen is around $39. It is entirely possible that you simply forgot to pay your bill. It does actually happen.

However, there are many people- me being one of them- who have not paid a bill on time due to the lack of money to pay it. For those of us who are lacking the money to pay the bill, it is not going to be any easier to pay a late fee. And, worse, once that late fee is added to your balance, it is fair game. It will accumulate interest.

So, imagine this: you swipe your card at Domino’s for a $20 total and you are late paying the bill. Now, $39 is added on to that $20, meaning you now owe $59. Ah, but wait- there’s more. Your card charges 15% or 17% interest, so that adds on another $10 or so. You went from a $20 charge to a $69 bill. That’s an extra $50- that’s more than you paid for the pizza! And that is if you even get it paid off this month. If not, there will be more interest added to the next bill.

Sometimes late fees cannot be avoided. Life can get in the way and throw us off track. It happens to everybody. You might not be able to avoid the late fee, but try to find the one with the lowest late fee (and lowest interest rate). That way, even if you are late, it will not add on too much.

Balance Transfer Fees

Oh, some companies have no shame in playing on our weaknesses- one of which being debt. If you owe hundreds- or even thousands- to credit card companies and you are suddenly offered a balance transfer card with 0% interest for the first six months or year, it can be so tempting to jump on it.

However, these cards tend to charge a balance transfer fee. Granted, they may boast a 3% fee, which sounds like a cake walk, but 3% of a large balance is still a large amount. If you really want to transfer your balance, you will need to do some math. Figure out how much it will cost you to transfer the balance. Then, think about what you currently pay in interest on these other cards. Which is lowest and has the best terms? That is the one to go with.

Annual Fees

Annual fees, or membership fees, are pretty common with credit cards, though not all cards charge them. Those that do often offer the best perks, such as cash back on gas and groceries, airline miles, and so on. I have seen annual fees as low as around $25, but more often they are closer to $100. Before jumping on a card with an annual fee, it is important to understand the ins and outs of the cards.

Really read the fine print- maybe have a friend read it, too- to make sure you know what you are getting into. Even getting 50% cash back on gas does not help if you only take the bus. You need to know all the details and determine if those perks will benefit you (more on this below).

Foreign Transaction Fees

If you never, ever purchase anything at all that involves a foreign entity or bank, you can probably ignore this fee. You may think, as many do, that a foreign transaction fee is added when you physically go out of the country and purchase something. This is not the case. You can be sitting on your couch in your pajamas in Anytown, U.S.A., but if you purchase something that involves a foreign bank at all, you just might see this charge. It will likely be anywhere from 1% to 3% of the charge. The only ways to avoid it is to avoid international business or make sure that your card does not charge you for this type of fee.

Cash Advance Fees

Not all cards let you withdraw cash, but those that do charge a fee with interest starting the day it is charged. You not only pay that interest, but you also pay a fee of about 5% of the withdrawal amount. There are also limits involved. If you find yourself needing cash too often, you may need to consider a new income stream because withdrawals fees will eat through your wallet in no time.

Returned Payments

If you try to make a payment on your credit card bill that does not clear for some reason, there is a chance you will incur a returned payment fee. It is basically like a “bounced check fee”. There is a chance that you can avoid the fee if you are able to take care of it before the actual due date.

However, if you cannot or if your credit card company does not give you the opportunity to fix it, you just might be paying of a fee. Fortunately, there are laws governing credit card fees that prevent the credit card companies from getting too crazy.

Like the late fees, returned payment fees will most likely be $28 or $39. If you have had no returned payments in the last six months, you cannot be charged more than $28. If there have been any other returned payments in the last six months, they can legally charge you up to $39 but no more.

Over the Limit Fees

Depending on your credit history, you may not get the chance to go over your limit. However, many companies allow some- or all- of their cardholders to go over their limit. For those that do go over their limit, you may or may not find yourself paying an over the limit fee.

According to legislation, this fee cannot top $28 if you have not gone over your limit in the last six months and no more than $39 if you have. The good news, though, is that you can completely refuse the ability to go over your limit by opting out of it. If you do this, any charge over your limit will be declined. Also, you can only get charged over the limit fees if you opted in to it in the first place, so your credit card company cannot just charge you without you knowing that it could happen.

Paper Statement Fees

This fee probably gets on my nerves more than the rest. Why do I have to pay for you to send me a bill? That is insane. Many companies I know will reward you for signing up for paperless billing- that is awesome. But, I am still trying my best to figure out exactly why it is okay for a company to charge a customer for sending out a bill. I understand that it *may* encourage customers to sign up for paperless billing, though I am quite unsure if that is the real reason.

As crazy as it may be, some companies are charging as much as $10 per month for a paper statement- way more than it costs to send it. If you have access to the internet and a printer, you are much better off printing the thing out yourself, if you need a paper copy. You could even print it out at your local library for way less than $1.

Reward Redemption Fees

Another irritating fee is this one- “Let’s charge you for using the rewards that you are already paying for through your annual fee.” These fees may be as low as $20 and can go up as high as you will agree to.  Not every company charges a reward redemption fee. Others may charge them if you redeem a certain way- like it is free to do online yourself but if you call and have someone else do it they charge.

Other companies charge you for redeeming them regardless of how you redeem them. This is definitely a fee you should find out about and add in to your calculations when deciding if the perks are worth it.

Activity Fees

Credit card companies do not want your credit cards to sit in your wallet unused- they do not make any money that way. These fees were once called inactivity fees and you would be charged for not using your card. Financial laws now make it to where this can only happen if you do not use your card for more than a year.

Now, they charge what they call activity fees. This means that if you do not spend the amount of money that they set- which may be over $2,000- you owe a fee. Some companies charge this fee up front, then refund it to your card after you spend the specified amount. These fees are pretty common, but you can find cards that do not charge them.

Payment Protection Fees

These fees are intended to cover the charges you make in case of job loss or some other issue covered by the program. These can get expensive as they may charge as much as $1 per $100 on your bill. That can add up big time. It would be so much better to just put some money up yourself to cover hard times.

Please do be aware that although these are the common fees, financial laws change quite often. When they do, some credit card companies get creative and come up with ways to present new fees. So if you notice something that we did not mention here, it is not surprising.

Are Any of the Fees Worth It?

Like many other financial topics, there is no one-size approach to answering this question. It really, REALLY depends on your finances, your lifestyle, and, well, you. Let me try to break this down. Let’s say that I find a credit card that charges a $99 annual fee with one of the perks being that I can earn 1% back on groceries. 1% may not sound like a lot to some, but we are a family of six- three of which are tweens and teens. We spend a lot on groceries, so that 1% cash back would more than pay for the annual fee- it would leave a nice little bit in my pocket, too.

On the other hand, we never travel by plane. Even if we did, it would take entirely too long to earn enough airline miles to justify any type of annual fee. For someone who travels enough, it might be worth paying for the airline miles perk. A single person who always eats out, though, may not earn enough back on groceries to justify that card.

In my personal opinion, annual fees for perks you can actually benefit from might be worth it. Others, though, not so much. I mean, no, paying to get a paper statement or having to pay late fees are never worth it. If you just absolutely have to pay something with cash, a cash withdrawal fee might be worth it. Also, if you desperately need to go over your limit for some reason and the over the limit fee is cheaper than loan interest rates, you might find yourself willing to pay for it.

Again, though, this all comes down to you. Before signing up for a card, look at all of the perks and fees attached to it. Really do some calculations and ask yourself if those fees are worth it. Will you actually use the perks? When I ask this, I do not mean that you suddenly think, “Oh, yeah! I am going to start collecting airline miles so when I want to go on a trip, I can.” More often than not, you will either never take that trip or not take it before your rewards expire. If you already travel every month or two, though, the fees might be well worth it.

Avoid These 7 Common Credit Card Mistakes to Save Money

Avoiding Credit Card Fees

With some of these fees, they can only be avoided by not getting a card that charges those fees. Others just require a watchful eye and some discipline. Here are some tips to avoid fees:

Compare Credit Cards

The biggest way to avoid fees is to really compare the credit cards you are looking into. It is not likely that they will charge all of the same fees and offer the same perks. You have to pay a good deal of attention to these so that you have no surprises and so you can make the best decision.

Know the Fees

Going along with the previous tip, you have to know the fees your card charges if you expect to avoid them. If you are unaware that your card charges a paper statement fee, you will not be so quick to sign up for paperless billing. Know your fees well and the terms that go with them.

Keep an Eye on Your Bill

Always, always pay attention to your credit card bill- for more than one reason. First, you want to be sure that you are not being charged for something you did not purchase. This can help detect identity theft early. If you notice it, shut the card down immediately and call your credit card company.

The other reason is that you want to be sure you know what you are being charged for. Do not let yourself be surprised by fees you did not even know existed, or increases that you were not expecting. Keep a close eye on your bill and if you notice anything wrong or different, contact your credit card company immediately.

Shop Credit Cards Consistently

The best credit card shopping trick of all time is to actually shop credit cards. I mentioned comparing credit cards a moment ago. This should not stop after you choose your credit card the first time. On a pretty regular basis, shop around for credit cards. You can often find better interest rates and perks if you look around enough. At the very least, you need to do this prior to any special interest rate periods ending. Also, if you use your cards wisely, you will find yourself eligible for better things as your credit improves.

If you’re interested in getting a new credit card, you can shop them right now, here on Loanry. Consider companies selected by our partner Fiona. See below:


Use a Credit Card to Build Credit

If you are looking for a way to build your credit, credit cards are definitely a way to do it. You do, however, have to be incredibly responsible with it. Here are some tips to use your cards to build credit which can lead to better credit cards and help you achieve other financial goals:

Watch Your Charges

Do not charge items that you are not certain you can pay for. While you may have to break this rule in case of emergency, do not break it simply to splurge. Going out to buy a $1,000 smart TV that you do not see yourself having the money for any time soon is just not a good idea. Credit should not be used as a crutch to splurge.

Pay Your Charges Immediately

You do not have to wait until your bill is due to pay it. Some very smart people I know will go to the grocery store on their designated day. They have been budgeting for groceries, so they have money put away for it. They use their credit card at the store, but immediately pay it off when they get home.

For example, let’s say my friend Sally has budgeted and put away $100 for groceries. She waits to go to the grocery store until that $100 is in her bank account. At the grocery store, she pays $100 with her credit card. As soon as she gets home, she pays that charge off with the $100 she has put away.

How does this help? First, it shows her actually using her credit. Creditors want to see this, so Sally is showing good things on her credit but she is paying off the charge before interest is accrued. This, of course, saves her some money.

Pay Your Credit Card Bill on Time

If you cannot pay your bill early, at least pay it on time. Find a card that sends out the bill at a time you can actually pay it. The good thing with many credit card companies now is that they will let you choose your bill date. This means that if you get paid on the 17th, you can have your bill due on the 20th. Then, pay the bill on the 17th- you might be able to save some of that interest. Look for a credit card that gives you control over your bill date.

Protect Your Card

Identity theft is a big problem. Guard your credit card information at all costs. If you shop online, only do so on sites that have protection. You can tell these sites because they have a little lock in the address bar. You do not want to find yourself owing money for things you do not even get to enjoy because someone else is.

Conclusion

Remember that while credit cards can be handy, they can also be hazardous to your credit, which can be hazardous to your future. Be diligent and watchful, and know exactly what you are paying for. If you are in credit card debt with high interest rates, you might consider consolidating that debt with a personal installment loan. Just be sure that whatever steps you choose to take are well thought out and helpful to your financial situation.