Finding the Lowest Credit Card Rates – How Much Can You Save?

Credit card companies try to gather as many clients as possible and competition dictates them to offer lowest credit card rates. Actually credit cards can be conceived of a revolving credit line where you can purchase goods and services to as much as your credit limits. Then upon payment, even if it is only partial, you can again purchase goods equal to the remaining available balance. This is how convenient these plastic cards are. If you do not have money currently, you can buy things for emergency purposes.

If you are paying your credit cards partially or purchasing goods on installment basis, you are paying an interest for the unpaid balance. Finding the lowest credit card rates, you will surely save a lot of money in terms of interest. There are various ways to negotiate or find lowest rates. If you have a good credit rating or your bank deposit for the bank to which the credit card is affiliated to is high or you had been a credit card holder with excellent paying record, you can bargain for lower interest charges. Some companies offer low rates if you transfer to them your current balances with other credit card companies. You can even ask your current credit card provider for lower rates so you do not transfer your account.

Lowest credit card rates are compared in different websites

It is but practical to look for credit cards that impose lower interest rates. You will get information about this by visiting websites of credit card issuing companies. You can note down the different rates of every company. You have the websites creditcard.com, credit.com or creditcards.org as examples of websites that give data for making comparison on credit card rates.

Lower rate with balance transfer

In many cases, balance transfers are pegged with lowest credit card rates. If you have an outstanding credit card and your payment record is good, you can ask for lower rate. But before you transfer the balance, consult your current credit card issuer if it can match the lowest offer. Usually it will do when it wants to retain your account. Read some ads of credit card companies for introductory offers of low interest rate.

Savings on lowest credit card interest rate

Here is an approximation on how much you can save if you are able to negotiate lowest credit card rates. The exact amount differs on the rate difference and outstanding balance. Here are computations, under different circumstances, for your monthly savings on interest rate.

Same monthly credit card balance

Divide your new lower interest rate by your old higher interest rate. This tells you the proportion of the new rate. Multiply the quotient by the monthly interest rate charged on your bill. Subtract this from the amount you were previously charged. To illustrate, assume that the old interest rate is 15% and the new rate is 13%. Divide 13 by 15 to get a proportion of 0.8666. If you pay $75 monthly interest, multiply this by 0.8666 and you get the new amount of interest equal to $65. $75 – 65 is $10 monthly savings on interest if you get the lowest credit card rates.

Variable or changing credit card balance

If you are making more payments or more purchases, your credit card balance changes; you will compute your savings with a different formula. The rate of interest will be based on the average credit card balance for the month. Multiply your higher rate by your average monthly balance. Multiply your lower rate by the average monthly balance. The difference between the products of these two computations will represent the difference or the savings.
Whether you maintain the same balance or you lower your monthly average credit card balance, a lowest credit card rates will give you savings. Overtime, the small savings grow bigger. This is the reason why having a good credit history you should always negotiate for lowest rates.