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> Low Interest Credit Card - UK Guide
In a nutshell
Credit cards that charge low interest rates/APRs on the money you owe.
Best Credit Card For
Anybody looking to save money on credit card spending. Low interest credit cards are particularly useful to consumers that don't repay their credit card balance in full every month.
The credit limit you'll be given will depend on your income, your credit rating and the credit card company you choose. Each card provider will have their own limits and ways of applying them so there is no standard across the industry. In general terms you'll be given higher limits for better credit ratings and lower limits if you have poor credit. Some cards - such as premium credit cards - may come with higher credit limits built in but you'll have to earn a certain amount (i.e. £20,000+) before you can qualify for one. Some premium cards impose no credit limits.
If you don't pay off your credit card balance every month, then you'll reap specific benefits from a low interest credit card. The lower your interest rates, the less interest will be added to the balance you owe every month. So, you can use a low interest credit card to make sure that you keep these interest additions as low as possible.
What to look out for
It can be quite hard to get the best low interest credit cards - especially if you have a poor credit rating. So, you may apply for a low interest rate card and find that you are actually offered higher rates than those advertised as you are seen as a higher risk. The best rates are reserved for consumers with impeccable credit records and some card companies can be particularly fussy about who they give the lowest rates to. Low interest rate credit cards can also lull some consumers into a false sense of security. They give a comfort factor and it is easy to spend more than you should because you know that the interest charges will be low. However, credit card interest charges - no matter how low they are - are among the highest within the consumer finance sector. So, if you have any interest being added every month then you'll see your debts grow relatively quickly.
Some credit card companies also only offer low interest rates for a specific period. So, once your introductory offer is up you'll go on to their standard rate - and this can be a lot higher than you would be given for a mainstream credit card. You must also make sure that you try to make at least your minimum payment every month - failure to do so will result in penalty fees and costs. And, missed payments will eventually turn up on your credit rating which could affect your chances of raising finance in the future. If the worst comes to the worst and you stop making payments altogether then you run the risk of having your property/possessions repossessed via the courts to repay what you owe.
A good low interest rate credit card has no real alternative if you don't think you'll be paying off your balance every month. If you always pay off your balance then you could look at other deals such as reward schemes as interest rates won't be your primary concern.
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