Info about Credit
Unlock the Key to Huge Savings: Master Credit Card Rates and Transfer Offers
Want to save yourself hundreds or even thousands of dollars on your credit card bills? When you understand how card issuers set interest rates, you’ll be able to spot the good, better, and even exceptional card offers that can significantly improve your financial picture.
I have routinely used low-rate offers to creatively finance all sorts of purchases, including real estate, wedding-related expenses, and a minivan (to accommodate our five kiddos).
I’ve saved thousands and have improved my cash flow in the process.
Many people also use credit cards to get out of other types of debt, as strange as that may sound. There’s no good reason to pay 10%, 15%, or more in interest when card issuers are eager to sign you up for a card at 0% or a very low rate.
Maximizing the benefits of low card rates does require a little bit of knowledge, though.
• Know Your Interest Rate
Rates change from time to time, so it’s smart to stay aware of the current rate on your credit card, especially if you carry a balance and pay interest based on that rate.
Knowing your rate will help you decide when it’s time to shop for a better deal because you’ll be able to compare your rate to new offers. If you have more than one credit card, knowing each one’s rate will keep you from accidentally using a card with a high rate when a lower rate card would have been more advantageous.
Even if you pay your balance in full each month, it’s important to know your interest rate. Cars break down, jobs are lost, and unfortunately, marriages end. In short, life happens! Although it’s always a good idea to have an emergency fund, that isn’t always an option. Sometimes the job search takes longer than expected or you might have a costly auto repair, leaving you with no other choice but to put some expenses on a card. If you’re not up-to-date on your rates, you could end up paying more in interest than you would with a different card.
• How Your Rate Is Determined
Finding attractive rates can result in big savings, so understanding how they work—and, more important, how you can work them to your advantage—is key.
How exactly is a rate configured? It normally starts with the short-term interest rates set by the main bank of the federal government, the Federal Reserve Bank (aka the Fed). When the Fed raises or lowers short-term rates (to control inflation, spur economic growth, and so on), banks typically pass on such changes to their customers by raising or lowering their prime rate, which is the lowest interest rate banks charge their best customers. The prime rate has varied greatly over the past decade or so, from as low as
4.00% in 2003 to as high as 8.25% in 2007.