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Low interest credit card for balance transfers

By: Andrew Regan

The interest rates charged on credit and store cards can vary widely. That applies not only to the headline rate ? the interest rate that appears as a ?typical? rate in advertising and marketing literature ? but also to individual customers; according to their personal credit rating.

There is a plethora of different credit cards available in the UK, all designed to do different things. Some are loyalty based cards which allow users to rack up points or rewards that they can redeem at a later date. Others offer cashback, some are designed for everyday use offering no frills and charge a low rate of interest and others may be primarily marketed at people who wish to transfer a balance to a permanently low rate.

In addition, there are cards aimed at particular individuals such as starter credit cards for young adults and other potential card holders who have not yet managed to build up a credit rating profile, such as people new to the country. These cards tend to offer relatively high interest rates as they are designed to be used by people whose ability to handle credit has not been tested. However, providing the accounts are handled satisfactorily, with payments being made on time and the credit limit is not exceeded, then they will help the user build a good credit rating.

On the other hand a low interest credit card can be used as a tool to get those already holding credit card balances, probably paying market interest rates of around 15 ? 16% p.a. upwards, back onto the financial straight and narrow. Providing that those applying for such low rate cards have been making payments regularly on time and have a sufficiently good credit rating then they should be looked upon favourably by the credit card issuer, although there are no guarantees of course.

By taking out a low interest card debt can be paid off much quicker. By paying the same amount each month more of the payment will be used to clear the balance of the debt rather than the higher interest charges on a higher rate card. So, rather than maintaining a soul-destroying balance and paying punitively high interest rates the card holder will see their debt balance gradually and consistently reduce, leading to greater financial freedom.

At the end of the day, do your research and make sure that you are getting the best credit card deal available on the market according to why and ultimately how you use your credit cards.

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

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Use two cards to beat the banks. Disciplined users can use two cards to maximise the benefits of both interest-free periods and lower interest rates. Typically cards offer one and not the other. However, if you have one of each type of card you can: make all your credit purchases on the card with interest-free days; if you don't have the ready cash to pay the account in full by the due date, use a cash advance instead from the low-interest card to pay it off. This means you have made use of the interest-free period but have the outstanding debt attracting a lower interest rate. Of course, it is better to pay any outstanding balance by the due date and be done with it, rather than rolling your credit over from month to month like this.

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