Tricks and traps of low-interest credit cards

By Chesutiko

While a low-interest credit card could potentially save you hundreds of dollars, not every card offering reduced rates is as beneficial as it appears. Protect yourself by reading the fine print and knowing ahead of time the pitfalls of low-interest credit cards.

Carefully read the terms and conditions when signing up for a low-interest credit card. Several of these offers are honored for a short period before the rates skyrocket. This can create a vicious debt cycle in which high rates make it difficult to pay off increasingly high credit card balances.

Also, some credit cardholders, tempted by their low interest rates, charge more on their cards because they believe the rates will make their balances more affordable. But credit is money you borrow, and unless you are able to fully reimburse your lender at month's end, you will accrue additional charges through interest. In the end, the more money you borrow, the more money you stand to lose if you leave an unpaid balance on your card each month, regardless of the interest rate.

While many Australians try to save money by doing a balance transfer from one card to another, low-interest-bearing card, doing this costs money. Always be cautious, and read carefully through the terms and conditions when setting up a new account. Australia already suffers from debt, and the last thing our country needs is more.

Not all low-interest credit cards are bad. But the best plan of action is to be cautious and read through your accounts terms and conditions before making a final decision.

Article by Chesutiko

Published: December 16, 2009