Top 3 Benefits of Low Interest Credit Cards

Credit cards with low interest rates are a great way for consumers to increase their buying power while saving money.

• Save money

  If you plan on carrying a balance on your credit card – and who doesn’t nowadays – then the interest rate associated with that card becomes extremely important. The higher the rate, the more you will have to pay for using the card for your purchases. Many credit cards have high rates and this makes purchasing high ticket items like televisions and computers expensive.

  Just think, if you purchase a $1,200 television with a credit card with a 24% APR, you will spend $576 in interest if you pay off that purchase over a two year span. If you purchase that same TV with a low interest credit card that has an APR of 11%, you spend just $264 if you pay it off in two years. That’s a savings of $312. Now, apply that savings to all of your small and big purchases, and you can see how low interest rates credit cards can really pay off!

  You will also save money with a low interest credit card if you use it to conduct balance transfers. A balance transfer is when you utilize your low rate card to pay off other credit cards. This can save you big money depending on the rate of the card that you are paying off. Just as was demonstrated by the above example, cutting your APR in half can seriously cut your interest paid over time.
  

• Lower minimum payment

  Credit cards with low interest not only save you money in the long run, they can also free up cash every month. This is because lower interest results in lower monthly payments.

  Minimum payments are a specific percentage of what you owe. The less you owe in interest, the less you will owe overall for your credit card. This means you have more money each month to pay other bills and do something fun with your friends and family.
  

• Pay off debt faster

  Low interest credit cards make it easier for you to pay off your credit card debt faster. As mentioned previously, the credit cards can be used to complete balance transfers. When you transfer balances from your high rate cards, your debts will now be with the lower interest rate. If you continue to pay the same amount each month as you were with the higher rate cards, your debts will be paid in full much faster.

  For example, say you had a $1,000 balance on a 21% APR card. Minimum monthly payments for that card were $40; making just the monthly payments would take you 7 years and 11 months to pay off the card. If you were to do a balance transfer to a low interest credit card with an APR of 9.9% but continued making the same monthly payment, you would then pay off the debt in 6 years. That’s paying off the debt almost 2 years earlier while still saving big money!