What’s the difference between ‘low rate credit cards’ and ‘no rate credit cards’?

By | October 5, 2011

Looking for the best value deals is always crucial when comparing credit cards, and for many people this can be the key factor in making their decision over which card and credit company to choose. However, you should make sure to read the fine print and consider all the options when choosing products that claim to offer zero per cent interest – as you may ultimately end up paying more than you would when using other cards.

One of the most important factors to consider in this regard is the fees charged by your credit card provider for different activities. Although you will not incur any interest with no rate credit cards, sometimes the fees charged for making purchases or balance transfers can be higher than those of low rate credit cards. Even a small fee of three per cent could prove to be comparatively expensive if you’re making a larger balance transfer, and this could make no rate credit cards unsuitable depending on the type of activities you will be using the card for.

Another important consideration is the length of the introductory period, as it may often be the case that you only enjoy zero per cent interest for a very limited time, before your account switches to a higher APR – sometimes this can be as high as 18 per cent. For customers who are concerned with long term savings and financial security, low rate credit cards can therefore be the preferable option.

With a good low interest credit card, you’ll be able to enjoy low rates on purchases and balance transfers for longer, without having to swap to a new card every few months, as can be the case for no rate credit cards. If you’re concerned about improving your credit rating, sticking with the same low interest credit card for a longer period could also look particularly good on your credit profile – as long as you’re able to keep up with repayments each month.

There are many excellent deals on no rate credit cards available, but consumers need to learn what to look for and how to avoid the common pitfalls. If you’re concerned with stretching your money further, you may also wish to look for low interest credit cards that allow you to earn rewards as you spend, or that feature other benefits to reduce the amount you spend each month on your essential purchases.