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How To Find the Lowest Credit Card Rates

How To Find the Lowest Credit Card Rates

Credit cards have provided a level of convenience unseen since the invention of the automobile and as such has been one of the most widely adopted new technologies of the 20th century. The fact that they have been so thoroughly embraced however does not mean consumers understand the in and outs of credit card use or its terms. One of the most significantly misunderstood concepts is that of a credit card annual percentage rate. With a little explanation and some research on your part you'll learn how to find the credit cards with the best interest rates.

Interest rates on all types of loans, including credit cards, aren't just made up and pulled out of the air but are based on certain criteria as they pertain to the consumer. What this means is that 10 separate individuals could all apply for the exact same credit card from the same financial institution and receive drastically different interest rates. This is almost entirely due to the results of a credit review by obtaining the persons credit report. The credit report provides a complete credit history and determines the credit worthiness of the borrower. Based on the credit worthiness the borrower receives a credit card interest rate ranging anywhere from 7.9% all the way to 23.9%. It is crucial to understand how interest rates work when looking for the lowest credit card rates because your own credit history determines what rate you'll receive.

First and foremost get a free copy of your credit report from one of the three major credit bureaus. Federal law requires Experian, Equifax and TransUnion to provide consumers with one free credit report every 12 months. By going to www.annualcreditreport.com you can request your free credit report and see exactly what a lenders sees when determining whether or not to issue you credit and at what interest rate. You can also request a FICO score at the same time which is a single numerical representation of your credit worthiness. Once you have your free credit report and possibly your FICO score you, can determine what steps you need to take to clean up your credit if necessary before applying for a credit card. A credit score above 700 is considered good while any score below 600 would be considered poor resulting in higher interest rates.

If your credit score is in the good range or better then you can start applying for credit cards but it's important to understand the terms. Credit cards are fairly standard in that you're able to purchase a product or service with loaned money at a given interest rate for a set period of time. What varies are these generalities plus some value-added features. When shopping for credit cards, you can't just look at the lowest possible interest rate as the only factor. This is because a credit card may have an interest rate of 8.9% but may charge an annual maintenance fee and have higher penalty fees than competitors. There might also be a variation in the length of grace periods or no grace period at all. In addition, some credit cards have incentives which provide cash back or rewards points that can be used for free gas or airline tickets. Credit cards which offer these additional perks may have higher interest rates but these value-added features may be more important to you as a consumer.

Generally speaking credit cards offered by credit unions, because they are member owned, often have lower interest rates than credit cards offered by banks or other financial institutions. It is also better to pick no-frills credit cards for their lower interest rates than ones that offer perks. When trying to find the lowest credit card rates it pays to select a basic credit card with no perks at the absolute lowest possible interest rate and no annual fees from a credit union. In reality, most consumers simply need the convenience of having a basic credit card accepted at all retail locations. There are many online resources available which compare credit card interest rates and any additional features. Now that you know the basics of what to look for you should be able to find a credit card best suited for your purposes.

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