When choosing credit cards, comparing the interest rate is important. Keep in mind that different Issuers have varying terms in charging interest to their cardholders.
In this article, let’s discuss the options you have when comparing credit cards in the market.Fixed vs. Variable Interest Rates

A credit card with a fixed rate of interest is a great choice since you can be assured that your APR will stay the same regardless of the changes in the Prime Rate. However, most credit cards today offer a variable rate of interest.

A variable interest rate is dependent on the status of the Prime Rate. If the Prime Rate increases, so will your credit card rate. Despite the restrictions of the New Credit Card Law, issuers can still impose an increase under the following conditions:

• If the Index Rate increases (for variable-rate cards)
• If the promotional period has expired
• If the cardholder is delinquent for more than 60 days

Take note that New Law does not impose a Cap Limit on the interest rate. What attracts a lot of people with a variable rate credit card is that they start really low. However, keep in mind that the initial low APR can be affected the Index Rate in the market.

The 0% Interest Credit Cards

Many Issuers offer “teaser” rates to attract new cardholders. The New Credit Card law requires all Issuers to give at least a 6-month introductory period and no less than that time frame. When choosing a card that offers a promotional rate, don’t forget to check what the regular APR would cost you when the introductory period ends.

Purchases, Balance Transfers and Cash Advances
Some credit cards impose varying APR on purchases, balance transfers and cash advances. For instance, the interest rate that applies on balance transfers may be different from the rate applied to new purchases. This is why it is crucial to read the fine print before signing up for your chosen credit card.

Seriously consider how you primarily plan to use the card. If you need a credit card with a zero balance transfer rate to pay off your outstanding balances that you transferred from other cards, then you need to be aware about the APR applicable to new purchases. On the other hand if you primarily need a credit card for your important expenses, then it will be better to choose a card with a low interest rate on purchases.

There are card that offer the same rate of interest for both Purchases and Balance Transfers. However, a different rate is usually applied for cash advances. Another thing to remember is that cash advances are not covered by the grace period. Remember that the moment you take out cash from your credit card through the ATM, you will automatically incur the additional interest rate on your bill. Hence, cardholders are strongly discouraged from using their credit cards for cash advance transactions.

About the Author

Liz Roberts is a freelance writer and loan consultant. The website http://www.badcreditresources.com offers resources that specialize in providing bad credit loans and bad credit cards to people with bad credit.

Related Articles:

Matching Your Credit Card with your Lifestyle

Practical Tips When Comparing Credit Cards

Resources for YOU:

• Credit Cards for Bad Credit
• Instant Approval Credit Cards

  Reprint rights available as long as links are left intact and active.