Finance Credit Cards

Great Advice For Credit Cards Rate

Published at 04/01/2012 16:30:38

How can credit cards rate differ?

If you have credit cards and use it often then the credit cards rate would be significant to you. The credit cards rate or the interest rate is the interest that the card issuing company charges. This is their profit from lending you the money to buy now and pay later.

Step 1

The credit cards rate will vary according to the company and type of card. If you are a holder of a premium card then you may have to pay a lower credit cards rate or interest. Some credit card companies will offer you a higher limit for the cards that charge a higher interest rate.

Step 2

What should we look for while choosing a credit card? If you are a person who travels a lot then you should a credit card that is widely accepted around the world. The credit cards rate is also important. If the rate is too high then you will not be able to afford it. The limit is another factor that you will have to base your decision on. Think about the limit that would be perfect for you and ask the company to give you the details on that credit card.

Step 3

Many credit card companies also offer reward programs. This means that you can collect points whenever you use your credit card. Other features like a low balance transfer rate, low annual percentage rate and specialty cards are also worth looking into. Some companies are ready to give credit cards to people with a bad credit record. As you can see, there is a lot more than the credit cards rate to check for while getting a credit card.

Step 4

How are credit cards rate calculated? The credit cards rate or interest is calculated in four main methods. These methods are based on different values. The first method is based on the average daily balance. In this method the average interest is calculated by the daily balance and then added to the principal once in a month. The next method for calculating the credit cards rate is the adjusted balance method.

Step 5

The reverse of this method is called the previous balance method. In both these methods the actual interest charged may be higher or lower than the expected interest. Two cycle average daily balance is another method for calculating interest.

Tip 6

How can I choose the perfect credit card? To choose and apply for a credit card you will have to contact the bank or the credit card company. They will have a representative explain the details of the card and the scheme to you. You should clarify all your doubts and get a clear idea about how much you can spend, what the interest rate will be charged and by what time you will have to repay the money.

Conclusion

Most banks and credit card company will charge you if you default a payment. Make sure you have a clear idea about the grace period that you have. Many banks will offer promotional interest rates too. These offers may have some complicated terms and conditions, so it is better to get a clear idea about them before you choose the offer.

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