There are two sides to a credit card. On the one hand, they help finance emergency purchases. Conversely, the wrong credit cards cost you more in interest and fees. In the end, the goal is to find a credit card and interest rate right for you.
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How to Get a Credit Card
According to the experts at SoFi, to get a 3% credit card, you need to know the steps to qualify. You are approved for one when the credit card company is willing to take a risk on you. As a result, they offer you a good interest rate and other benefits.
What Qualifies You For Better Interest Rates
One thing that qualifies you for better interest rates is your current financial status. Credit card companies like to work with customers who have steady incomes and clean credit reports. These factors mean they can expect regular and on-time payments.
Credit card companies also work with customers who don’t have perfect records. Perhaps they don’t make as much as others or have some warnings on their credit reports. In these situations, the card company still approves an application. However, the customer’s interest may be higher.
What’s an Interest Rate?
The interest rate is the fee paid for borrowing money. The amount is calculated every year for credit cards and called the annual percentage rate (APR). If you pay your card’s balance each month, you avoid paying interest.
What Interest Rate Works for You?
If you’re interested in applying for a credit card, look for offers with interest rates equal to or less than 14 percent. Those with excellent credit can get cards with a 10% APR.
Watch out for offers that seem to be too good to be true. These tend to offer a low APR for a short period. After that, the interest rates become considerably higher than 14 percent.
When You Shouldn’t Get A Credit Card
Don’t get a credit card if the interest is at or exceeds 20 percent. These cards cost more in APR fees than they do to pay the balance. Plus, approval for a high-interest rate card means your current financial state doesn’t qualify you for anything better.
How to Get a Low-Interest Card
The way to get a low-interest card is proper money management. Never spend more than you own. Usually, it’s better to spend below your means to create savings and financial stability.
On top of this, make sure you pay off your existing debts. Run a credit report and locate creditor information. Try to work out a lower payoff to close the account. Get a written agreement before you make that final payment.
Avoid getting a cosigner for your credit card. Although it might help lower your interest rate, it leaves the other person at risk. The credit card company goes after the cosigner if you can’t pay the balance.
Overall, be careful when you apply for a credit card. Read the application’s fine print to ensure the interest rate is within a suitable range.
