What is the first thing you look at when you receive a new offer
for credit? For most people, the answer to this question is that
they look at the maximum limit they can spend. In fact, what is
more important, and should be the first thing you look at with
any new offer of credit, is the interest rate. Credit or
interest rates are decided by the lender and can vary by such a
huge amount from lender to lender, that they can make a huge
difference to your financial security and well being.
For instance, if you are offered an interest rate that is
significantly higher than the levels you are currently enjoying,
the advice is to refuse such offers as you are already getting
better rates from other lenders. Of course if you are desperate
for increased credit limits and are unable to get more on your
current credit rate with your existing credit provider, then the
increased rate may still be attractive to you, but if this is
not the case, as it is not for many customers, then you should
refuse the offer.
While the credit rate expressed in the APR or annual percentage
rate, is generally considered to be the cost of the credit,
there are other terms of the agreement that will affect the true
cost of the credit. For example, if one credit provider seems to
be offering you a lower rate, but requires the loan to be
secured over your home or other property, this is an added cost
you should factor into your considerations. Also, if the lender
provides you with a very short interest free period in which to
pay your bills, this is not as low an interest rate as it
appears.
Another thing that you should be looking at when considering
credit rates, is the various charges, penalties and fines that
the credit provider may charge to your account in certain
conditions. For example, a low credit rate may not be quite so
low if there is a monthly or annual fee for the card. Likewise,
if you are going to be subject to drastic fines and penalties
for late payments, the offer may not be as attractive as it at
first appeared. Some credit rates are only introductory and only
last for a few months before jumping to a higher rate, others
will only apply so long as you keep your payments on time and if
you fail to do this will jump to a higher rate.
About the author:
Peter Kenny is a writer for creditcards-gb For additional
articles and an extensive resource for everything about credit
cards, please visit us at
http://www.creditcards-gb.co.uk and
http://www.creditcards2go4.com
