How to Find the Lowest Credit Card Rates

By Larry Amon

  • Overview

    Almost everyone uses credit cards but very few people pay attention to the details of the card beyond the initial selling point of some kind of reward or into APR. However, picking the card with the lowest rate is probably the most important thing you should do, but it's a little more complicated than just reading the advertised rate. With a little homework you can learn how to really pick the credit card with the best rate.
    Credit cards
    • Step 1

      Research your credit. Go to Annual Credit Report (see Resources below) to get a free copy of your credit report. This site is the only site authorized by the FTC to give you a completely free copy of your credit report, once every twelve months. If you have a lot of late payments or you are maxed out on a lot of your credit cards or if you have charge offs, than you are unlikely to receive some of the best rates available. Getting your FICO score will give you a better idea of how good or bad your credit appears to credit card companies. You can go to My FICO (see Resources below) to get your score for a fee or you can use their estimator for free to get an idea of your score. Above 700 is pretty good, below 600 is considered bad and between the two ranges are varying degrees of mediocrity.
    • Step 2

      Understand the rates and the fine details. APR is the rate credit card companies use in a formula to determine your finance charges. You will be charged based on either a monthly or daily periodic rate. A monthly or daily periodic rate is your APR divided by either 12 months or 365 days. You will get charged your monthly or daily periodic rate times your average daily balance times the days in the cycle. The days in the cycle is left out if the card uses monthly periodic rates. You also need to know what grace period the card offers, some cards offer no grace period at all. Be sure to look at fees as well, because if a card has a really low APR but then charges you through the roof for one late payment it may cost you more very quickly. You also need to be on the lookout for cards that will move your APR up very high if you miss a payment or two.


    • Step 3

      Figure out what's best for you. Cards that offer rewards for specialty purposes may give you a better overall rate if you factor in the money you get back. Often though, the reward rates are very little on things you purchase all the time and higher on more rare purchases. If you find a card that gives you a percentage back on all your gas purchases, calculate how many gas purchases you will make in a year and see if the amount you get back is more than the amount you might be charged in a higher APR over a year.
    • Step 4

      Go to the web. Bank Rate and Credit Cards (see Resources below) are two good sites to help you compare credit cards. After you have narrowed down your choices, be sure and go to the cards' websites to double check that the offers are still available and to see if there is anything you may have missed from a third party website.
    • Step 5

      Check your connections. See if you are eligible for a credit union, they may offer better rates to their members. Also look for any other organizations, such as alumni groups, that can get you a better rate.
    • Skill: Easy
    • Tip: Be willing to call the credit card company to negotiate a good rate.

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