Why Low Interest?
If you’ve kept your debt down consistently then credit card interest rates probably don’t appear on your radar very often. But if you do have trouble paying off the balance from time to time a low interest rate can make all the difference. Your credit card interest rate will determine whether it takes you months or years to clear that balance.
Advantages of a Low Rate Credit Card
Annual percentage rates are less on low rate cards. For most of these cards, the low rate is a lifetime rate, meaning it will last until your card expires. There will be no associated annual fees or rate rises but no interest free period either like some standard cards have.
“They’re ideal if you usually pay your balance in full but may occasionally make a big purchase and carry a balance over”. Clearscore has a wealth of really useful information on their website about low rate credit. Shopping around for the lowest lifetime rate you can get is a good idea. The average is around 7% but some can be found slightly lower than this, like Lloyds Bank Platinum low rate credit card. Luckily card comparison sites are a dime a dozen and will help you in your search.
Raising Your Credit Score With Low Rates
If you’ve occasionally failed to clear your balance at the end of the month a drop in your credit score can be disheartening. At standard 18% APR levels, paying back your balance can be tricky and take a long time. Not so with a low interest card, at lower rates you’ll find it much easier to pay down your credit card balance. Reliably and quickly paying back your balance will restore your credit score sooner than you would at a standard rate.
Keeping your debt low consistently is greatly helped at a lower interest rate. Being seen as less of a liability is always a good thing for your credit score and lenders will be more likely to approve requests for a higher credit limit in the future if you have a good track record.
“If you already have a credit history, but want to improve your credit score, you need to demonstrate that you are financially responsible. To do so, you need to develop a financial track record in good standing.” Forbes have written extensively about ways of improving credit scores along with a plethora of other reputable sources like This Is Money.