Beware the Low Interest Rate Trap

Not all money borrowed on credit cards is the same. You should ALWAYS compare credit cards to find the best low interest rate deals but remember that not all money is the same. This sounds strange I know because surely money is money right? Wrong, credit card money especially is like say grapes for example. Grapes vary in their characteristics and in their price and so does credit card money and low interest rate money in particular.

There are three things to look for when you compare low interest rate credit cards.

1. How long does the low interest (very often zero) period last?

2. What is the rate of interest you will be charged when the introductory period ends (and they always do end)?

3. Is there an equally low interest rate for both money transferred from another credit card and money spent on the new credit card?

A low interest rate credit card is of particular interest to anyone who has an outstanding balance with a credit card and who is paying a high interest rate currently. So while you may not see the distinction between money in a balance transfer and money spent on the same credit card your credit card company gives them different characteristics and different prices. The money spent may have a low interest rate but the balance transfer may have a high interest rate. Sweet grapes for them but sour grapes for you.

Some credit card deals will have the same low interest rate deals on both kinds of money. The only way you can be sure is to have a credit card comparison website run a check on the whole range of credit cards available in the market. Doing this will save you both time and money by pointing you in the direction of the most suitable low interest rate deals around.

Another factor that the credit card comparison sites can inform you of is the fee charged by credit card companies for the transfer of balances. This fee will vary across the low interest credit cards and range anywhere between 0 and 3% of the balance transferred. A high setup fee or a different rate may offset much of the low interest rate savings for different 'types' of money.

Then there is a possible added potential low interest rate trap with different time periods applying to the different types of money. For example there is a credit card provider that offers a low interest rate for life on balance transfers. The unwary credit card holder find themselves paying over 16% interest on purchases before they have finished paying off their balance transfer because their money will go first to the spending balance.

Only an independent credit card comparison can make borrowers fully aware of all the potential traps when it comes to low interest rate credit cards and balance transfer. Tread carefully and read the small print in any credit card contract.

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