(MP) Usually, our mailboxes get flooded with offers for low credit card costs with rates of 5%, 6% or lower against 25% and even more for the average card. These financial houses will advise you – sign on the dotted line, and your unpaid balance will be transferred to a better card at a far lower rate. Example, you transfer a $1,500 balance on a credit card carrying a 19.8% interest rate to a card offering a 5.9% rate to use on the first initial. Your savings over that year will come to over $200.
You might not want to abandon your existing card yet, everything that looks good isn’t always good. The price of transferring to a different company may cost you more in the end. Before you sign, make certain that your new issuer can answer some pertinent questions.
How to Lower Credit Card Costs?
Is there an annual fee for this card?
Some issuers offer a tempting interest rate but hit you with a high annual fee. If the issuer won’t waive the annual fee, look elsewhere.
How high does the new rate go when the trial ends?
You don’t want a card that when the trial end jumps to a higher rate than you’re currently paying.
How long does the new rate last?
Demand at least six months – a year is optimal – to give you time to pay down your balance at the new rate.
How long is the grace period?
The ideal is no interest until the charge has been on your account for 25 days. Some cards start charging interest the day you make a purchase.
You say I’m pre-approved for this card. What exactly does that mean?
The lender may re-screen you after you sign. Soft spots in your credit history could bump you to a higher rate. Ask them is this a company practice before signing to keep your credit card costs low.
What’s the charge for late payments?
Some issuers wait a few days after the due date before charging the late payment penalty. Be wary of cards that charge the penalty the first day you’re late.
Will a late payment affect the low, introductory interest rate?
Some issuers bump you to a higher penalty rate even during the introductory period if you’re late in paying. Ask them about their policy before signing up.
What rewards does the card offer and how do I earn them?
The card may offer a cash rebate or frequent-flyer miles or cash reward. Make sure the rewards are sufficient to offset whatever fees and interest charges you’ll eventually pay.
If you carry too many credit cards, you risk running up big balances on all of them. When to try buying a home or car, lenders will see all those cards as a red flag. Your loan could be turned down. To keep credit card costs low seek out lower interest rate cards, but ask all the right questions before you sign up and give your current card issuer a chance to beat any new deals before you leave.
Where to get help?