Interest on credit cards is usually known as Annual Percentage Rates or APRs. Though the term used is ‘annual’, you are actually charged on a daily percentage rate. This just means that every day that you have unpaid credit, the amount of money you have to pay back gets bigger because you don’t just pay for the original amount that you owe but also the cost of the money that the lending company or credit card company allowed you to use. So every day, the total amount of what you owe today plus the interest on that money becomes the total upon which your balance is computed tomorrow. It then makes sense to have an account which has a low interest.
The way it’s computed is by taking the annual percentage rate divided by 365 to get the daily percentage rate and multiplying the answer to the balance from purchases and cash advance plus the previous balance. So if you cannot take advantage of the zero interest period, having low interest credit cards keep you from paying too much. The total of your credit card balance is considerably less compared to cards that have higher interest rate since your bill is aggregated. If you’ve got a previous balance, you don’t have to payer higher for the cost of your credit. This is really helpful if you don’t want to go overboard in your spending.
People who wish to move their balance from a credit card with a higher interest rate will definitely find the lower interest more manageable. Not only will it enable you to keep more money in your pocket but you don’t have to be pressured with the aggregate cost. This is one main factor why credit card debts are so hard to handle. If you want to improve credit rating or simply put your credit situation in order, it makes sense to switch to a card with a lower interest.
Basically, a credit card is helpful for the times when you have to make payments or purchases that aren’t in your budget but are needed all the same. Having a credit card with low interest doesn’t mean that you can spend more because you pay less interest. Being conscious of your spending habits and being wise in the use of your credit card will always be the best way to handle your finances. If you have a card that will help you out in times when you are a little under budget at a rate that will not encumber you in the long run then that may be the best for you to use. You should try to avail the benefit of using low interest credit cards.