Cheap Credit Cards - Are They a Myth
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Cheap Credit Cards: Are They a Myth?
Summary:
This article explores how to identify affordable credit cards and find the best options available in the market.What to Know About Cheap Credit Cards
Cheap credit cards come in various forms, and several factors need to be considered to determine if a credit card is genuinely affordable.
Understanding APR
The Annual Percentage Rate (APR) is often the first consideration when evaluating cheap credit cards. The APR determines the finance charges added if the balance isn't paid in full. A lower APR means lower finance charges.
Finance Charge Methods
When comparing low-interest credit cards, consider how finance charges are calculated. Many cards use the Average Daily Balance method, while others use the Two Cycles Average Daily Balance method, which can be more costly for those carrying a balance month-to-month. So, a card with a low interest rate might not be the cheapest if it uses the Two Cycles Average Daily Balance method.
Annual Fees and Interest Rates
Some cards charge an annual fee but offer a lower interest rate. Evaluate your spending habits to decide if the savings from a lower APR outweigh the annual fee. If not, it might not be worth the cost.
Grace Periods
The grace period?"the time after a purchase before finance charges apply?"is also critical. A typical grace period is about 20 days. Longer periods save you more in finance charges. A low-interest card may not be beneficial if finance charges apply immediately after a purchase.
Reward Programs
Cheap credit cards can include reward programs, but these are usually for those with good or excellent credit and may come with an annual fee. However, even cards without a low interest rate can be considered cheap if the rewards outweigh annual fees or finance charges, especially if you pay the balance in full each month.
Added Benefits
Credit cards often come with perks like purchase protection, extended warranties, roadside assistance, and travel insurance. Consider these benefits when choosing a cheap credit card. If you won’t use these perks, focus on finding a low-interest card with no annual fee. Otherwise, paying a bit more for additional benefits may be worthwhile.
In conclusion, choosing a credit card involves weighing various factors such as interest rates, fees, grace periods, rewards, and benefits. Understanding these can help you find a card that truly suits your financial needs.
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