Is A Low Fixed Rate Credit Card Or 0% Introductory Rate Credit Card Better
Most people when looking for a new credit card spend a lot of time debating if they should get a credit card with a low fixed rate for the life of the credit card or if they should get a credit card with a 0% introductory rate. Both have their strengths and weaknesses and let’s find out why.
If you are somebody that pays their bill off every single month and has never been late or missed a payment it does not really matter which way you go. Your not going to carry a balance anyways so picking the low rate credit card or the one with a 0% introductory rate will not matter. Seeing balances on anything bothers the heck out of you so its not going to happen. You do not like paying interest of any kind and the only one you know you can’t get around is the one that is on your mortgage.
If you do carry a balance than you are stuck in this debate. Should you risk taking a credit card with a 6 or 12 month 0% introductory rate or not? Let’s say that right now you already have a balance on a credit card and the new credit card is guaranteeing a small fee to transfer a balance but keep your rate at 0% for 12 months. In this case it would make sense to do it only if the fee is not more than what you would pay in interest over the year. If you know that you are going to use this card more and that paying down the balance is not an option than take the introductory rate. It will probably save you from big interest payments and make your life a whole lot easier.
The downside to this is that you are passing up on a credit card that will maintain a low interest rate over the life of the credit card. With major banks and credit card companies hurting right now in this economy many are willing to give you a credit card fixed at 5% as long as you do not miss a payment. That is a pretty tempting offer for anybody regardless of your credit history. If you pass it up you might not be able to get approved for another one in the future.
The low fixed rate credit card is perfect for everybody. The interesting thing is that most credit card companies will still offer you at least 6 months at 0% interest on a fixed rate credit card. In this case, you get the best of both worlds. You can take advantage of the introductory rate and at the end of it you will still get the fixed rate for the life of the credit card. This is assuming that you have a great credit history and that you can get approved for the card. If you cannot get approved on the credit card than you need to improve your credit scores. Doing so will help you get an approval next time. When banks see that you do not carry a balance next time they are going to offer the best rate on any credit card they have.