How 0% and Low Interest Credit Cards Can Save You Money on Interest Expenses

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No one wants to spend more money than they need to. By shopping for zero or low interest credit cards, you can save a significant amount of money. Just how much depends on the type of credit card you choose and the interest rate.

The Real Cost of Credit

Take a look at this chart which compares the actual cost of a $1,200 dollar television after adjusting for differing interest rates:

  0% Interest 11.99% Interest 15.99% Interest
Months to payoff 0 158 214
Total Interest 0 $900.22 $1,729.18
Original cost $1,200.00 $1,200.00 $1,200.00
Total cost $1,200.00 $2,100.22 $2,929.18

The value of a zero or low interest credit card is immediately apparent—the lower the interest rate, the greater the savings. Use the True Cost Calculator at non-profit college financial advice site to determine your interest costs as you shop for a credit card.

Finding a Zero or Low Interest Credit Card

Some credit card companies such as Citi credit cards offer a zero percent interest rate to new customers. These cards allow creditors to introduce their services and demonstrate some of the benefits they offer such as identity-fraud protection and frequent-flyer or a wide variety of other perks. It is their hope that you will become a loyal customer.

Discover cards and many other credit card companies also offer a balance transfer option to new customers. By transferring their balances to a new credit card company, customers can receive an introductory zero-interest credit card, saving them money on interest charges.

You can find these and other interest-saving credit card offers by searching the internet. Many sites offer a side-by-side comparison option that will greatly reduce the time you spend researching these offers.

Choosing a Zero or Low Interest Credit Card

As you evaluate each card, be sure to ask yourself these important questions:

  • Can I qualify for this card?
  • How long will the zero percent interest rate be in effect?
  • What will the interest rate be when the introductory interest rate ends?
  • Are there annual fees?
  • What perks does this card offer and how are they awarded?

Use the answers to these questions to determine which card is the best fit for you and your budget.

You might also consider talking to friends about their experience with the credit card company you are considering. They may be able to share valuable information about customer service or offer other important tips.

Your Credit Score Matters

It's important to understand how your credit score will affect your interest rate once the introductory rate expires. Credit card companies use your credit score to fix your new interest rate. Those with an excellent credit score can expect to receive the lowest interest rate offered. Those with good credit will pay a bit more and those with a fair credit rating will pay the highest interest rate charged.

Checking your credit rating before you apply is a good idea. Repairing your credit report by removing errors and cleaning up small dings can have a big impact on the interest rate you will finally pay. Add notes to your report to explain extenuating circumstances.

Interest rates charged after the introductory rate expires vary widely. Be sure you are aware of each card's rate and how your credit score will affect your final interest rate.

Zero or low interest rate credit cards offer big money savings to credit card users. Examine offers carefully and chose a card that will help you reach your financial goals.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.