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How Credit Cards with Low APR for Balance Transfers Can Save You Money

by Samantha Bennet on 2013/10/22

credit cards with low aprIf your’re wondering just how credit cards with low apr for balance transfers can save you money, read on. Before discussing about credit cards with low apr, let’s see what exactly a balance transfer means. If you are choosing a credit card that offers you a balance transfer, it lets you to pay off the balances or loans through transferring the debt to a new card that has a low APR. This works best when your new credit card has a higher credit limit than the debt you owe.

Why credit cards with low APR are significant?

Credit card companies are known to charge various interest rates for various reasons. If you have a credit score that is really bad or close to being bad, chances are that you are paying a higher maintenance fee and APR and sometimes the difference is as high as 20%. (Find credit cards for bad credit here.)

If you have a real good credit history, you will get a 0% credit card which means you can enjoy 0% interest for a limited period of time. (Find credit cards for good credit here.)

People with good credit history can typically enjoy APRs much better than customers with a bad credit score. For example, a customer with a good credit score typically pays 15% APR wherein a customer with a bad credit score ends up paying up to 29%. This is almost double of what a regular customer would pay and this is when credit cards with low apr come to your rescue.

How do credit cards with low apr work?

    •When you transfer your existing debt to the new card, a transfer fee of 3 to 5% is applied, depending on the lender and the scheme.
    •A 0% interest rate period is offered on credit cards with low apr. Sometimes this period can be as long as 28 months!
    •The goal is to pay off your debt during the 0% interest period because if you exceed this time, you will pay regular credit card interest rates of 15 to 20%.

    •In other words, transferring your balance doesn’t make any sense if you are not planning to clear it off within the permitted 0% timeframe because you will end up paying a lot more.
    •Remember, a monthly minimum due is applied on all credit cards with low apr. If you miss this monthly minimum repayment amount, your 0% deal is often gone and you will get into a more expensive rate and the whole process of transferring from your regular cards to credit cards with low APR will no longer make any sense.

Simply put, credit cards with low APR can help you to save yourself from paying off massive interest rates and high charges associated with cards. When you have a credit card with bad credit score, you may end up sticking to it since you have no other option, but when you start seeing some positives, it is imperative switching to a better card and this is where credit cards with low APR helps most customers.

Sometimes credit cards with low APR is not your best bet but negotiating with your current credit card provider can give you a better deal.

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