Why Be Cautious of Low Interest Rate Plastics

Any card tagged as ‘low-interest rate’ is a probable life saver. The mere ’low’ word in it is enough to get us to thinking about thousands of dollars we could save. Having this card in your hands will surely make you think ‘shop till you drop’.

However, a low rate credit card can sometimes do more harm than good.

Surprise Charges

Credit card providers know that people are easily gulled by enticing initial offers. So they plaster ‘low interest rate’ tags on their cards. But to get profits, they go on slathering your every use with extra service fees and other incomprehensible charges.

Sure, your purchases may have low interest rate but then you may face a shorter grace period causing you to be late with payments. The latter then has corresponding exorbitant penalty charges and that’s how credit card providers milk more and more money from you.

Annual Fees

Another setback of completely enjoying a low interest card is the corresponding annual fee. Some providers charge annual fees in amounts ranging from $50 to over a hundred dollars. If you fail to pay this amount, you won’t get to use your credit card.

Misconception

One detrimental effect of a low interest rate credit card is the misconception you get just because it screams the ‘low’ word. In your mind, you think you can purchase and charge more on this card than the regular ones.

But that’s exactly the mistake credit card providers are waiting for you to make. They want you to charge mindlessly until you rack up too much debt. Eventually, this leads to one thing: exorbitant amount of debt.

When you’re in the midst of this debt, you lose control of the payments until you either get late or can only afford to pay the minimum. Both have consequences and they are 1) longer presence of debt in your life and 2) accruing interest rates. Either way, there’s only one winner of this situation- the credit card providers.

It’s not wrong to find the best deal there is especially on credit cards. However, you must be wary of those too-good-to-be-true offers. Before jumping in to the first best looking deal, research thoroughly and read the fine print.