How Credit Card Interest Rate Levels Affect You

By Author: Ndxmart
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If you ask credit card holders the single thing they look for in choosing the right card you would probably get a variety of answers – from the cuteness of the picture on the card right through to the credit card Interest rate level!

I wish I was exaggerating by saying that some people choose a card based on the beautiful decoration on the front, but I don’t think I am. Others will choose a card because it gives them reward points in their favourite store or frequent flyer points for their favourite airline. While these latter features may be "nice to have" anyone who is being financially responsible won't choose a credit card based upon them alone, unless other more important factors are also in their favour.

To explain, the credit card interest rate affects every single purchase you make because a rate of interest will be applied to it that you will have to pay in addition to the cost of the purchase, unless you make sure that you always pay off the full debt within an interest free period that is provided. This can be 18% or 20% for example, so it can be a sizable sum and it's how the credit card issuers ...
... make a lot of their funds. If you are not looking at this, but have your eyes "turned" by the frequent flyer points you can accumulate for Qantas, then you are missing the bigger picture.

I mentioned there an interest free period – an important feature for many people who budget carefully and maybe even have a linked credit card account to their main bank account, allowing them to easily settle the credit card debt each month on time without paying interest.

Another important factor might be a low interest balance transfer rate. If you are wanting to consolidate your debts by paying off some high interest ones using a new card with a low interest balance transfer rate, then it can save you hundreds of dollars in interest payments. In this case you will want a card with this facility as its primary feature and the APR, interest-free period, cash advance rate or annual fee may not be important to you. However, with these cards you need to bear in mind that if you don’t pay off the balance transfer amount within the specified period (normally 6 or 12 months) new and possibly high interest rates will normally kick in, so beware! They can be something of a trap unless you are disciplined and responsible.

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