Credit Card ’s Talk

Eighty one percent of regular American households own at least a single credit card, making credit card ownership extremely popular nowadays. This high percentage rate is attributed to the convenience and benefits of using credit cards for purchases instead of using cold hard cash. There are also other additional features of credit cards (such as reward system and applicable discounts) that helps an individual generate savings out of what he/she spends using that card.

However, many financial experts stressed out that these facts are not just within the positive aspects alone. In fact, most of the credit card holders who belong in that 81 percent possess more than $8,000 worth of credit card debts. The accumulation of such huge credit card debts is attributed to several factors such as the consumer’s lavish lifestyle and unnecessary spending.

But one of the most common suspects in accumulating huge credit card debts is the interest rate.

According to a certain consumer credit website, a single credit card has an average interest rate of 18.9 percent, or relatively close to 20 percent worth of interest rate payments. With this high interest rate (this is just only the average) it will really lead the credit card owner to huge debts, especially if he/she has a lavish lifestyle.

Let us get deeper into the nature of interest rates. These rates are typically charged by the credit card company once the owner had accrued several balances on his/her due payments. In most cases, individuals tend to pay the required minimum credit card balance only, as shown by the 48 percent of the total 81 percent of credit card owners.

If you are only paying the minimum balance of your credit card, the tendency is the remaining balance (or the accumulated excess of the minimum balance) will just be carried over the next monthly billing period, which will worsen the situation. The remaining balance will pile itself, resulting to higher accrued debt, which is commonly hard to pay since the same interest rate will be applied on that higher accrued debt.

At this point, you need to apply for a low interest credit card. You will be provided with low introductory APR (annual percentage rate) which will lower your monthly interest rate payments. However, most financial experts argued that low interest credit card just motivates individuals to make more purchases. Since the interest payments are now easy to handle, you will think that it is okay to make many purchases.

Hence, before you apply for low interest credit card, you need to consider several things that you can use to evaluate and interpret several facts about low interest rates applied on these credit cards.

1.Most of low interest credit cards are offered as an introductory promo, making it an effective strategy in attracting more clients. Most individuals are accumulating larger credit card debts because they fail to understand that this introductory promo is limited within a certain period of time.

2.The effect of neglecting the fine print of credit cards is the worse thing that you can experience. In fact, almost 75 percent of credit card owners who accrued huge debts were not able to understand the things written on the fine print of their credit cards. Most of them confessed that they have just signed up immediately without reading the fine print.

Before you apply for any low interest credit card, make sure that you analyze it first or else, you will be counted among the majority of the 81 percent of credit card owners who have more than $8,000 worth of credit card debts.