Are low rate credit cards challenging loans

Monday, November 22nd, 2010
Updated: November 22nd, 2010
The content is accurate at the time of publication and is subject to change.

The annual percentage rate on your credit card depends on your credit rating. This means it can be anywhere between 0% – 40% and even more, varying drastically. However, low rate credit cards, when looked at from a different perspective are actually challenging the idea that credit cards are an expensive way of borrowing money. When it comes to the value delivered to the borrower, these low rate credit cards are even challenging the personal and secured loans.

The interest rates on loans are climbing steadily, which is why the low rate credit cards are standing out as a far better option for borrowers. There are 0% APR credit cards, but after the introductory offer, the interest rate jumps quite significantly posting a significant problem. On the other hand low rate cards have a low interest rate throughout until your debt has been settled. So instead of going for a loan from a bank with high interest or a 0% APR credit card where the timer is always running, it is advisable to go for a low rate card, if you want to borrow money at a fixed low rate and then pay it off at a pace that suits your finances.

The question to be asked however is whether these low rate cards are better than the personal loans or 0% APR credit cards. Finances are always relative and therefore, it varies from individual to individual. The credit cards with low rates mostly work better than the 0% APR cards purely because the customer is not racing against time, with a big risk waiting at the end of the time period. Many 0 percent credit cards are indeed offering 0% on both balance transfers as well as purchases. However, you have to repay the debt, before the rate on your card changes and if you don’t plan it well, you might end up paying a lot more interest.

The low rate credit cards can offers benefits over the secured and personal loans too. Unlike the loans, credit cards don’t need a fixed schedule for repaying the debt. If one month, your costs are high, you can postpone repayment to the next month. All you need to do is make the minimum payment and avoid being charged or damaging your credit rating. You have to make sure though, that you know what you want from your low rate cards, because terms and conditions on the cards vary drastically.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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