Will You Qualify for the Lowest Rate ?
If you have been evaluating the low interest credit cards, you have no doubt noticed that the majority of the cards from the larger credit card issuers offer a tiered interest rate structure.
The credit cards offering the lowest rates will only accept applicants who have an excellent credit history.
Tiered Interest Model for Low Interest Credit Cards:
The tiered pricing structure being offered on low interest credit cards means the issuers are willing to accept applicants with a wider range of credit scores. Those with excellent credit scores will be in a position to get the lowest interest rates, while those with only good to fair credit scores will pay the interest rate at the higher end of the spectrum.
Nevertheless, keep in mind.. with the tiered pricing structure you are much more likely to be approved for the credit card.
What Interest Rate Will I Be Paying on My Low Interest Credit Card?
Credit cards which utilizes the tiered pricing may list a range of 11.99% to 22.99%, or they may list several different rates such as.. interest rate will be either 12.99%, 16.99%, or 20.99%. Your particular rate will be solely based on your credit history.
It is true that with the tiered pricing, you will not know for sure which rate you will qualify for until the issuer has had an opportunity to evaluate your credit history. The advantage of applying online is that the issuer will normally be able make a determination immediately.
Suppose you are not eligible for the 12.99% rate even though it may be by only a few points.. your rate could jump to 16.99% without question. If you still don’t qualify for the rate of 16.99%, your rate will jump to 20.99%.
For this reason.. and in order to put yourself in a better position.. if your credit history is less than exceptional you will be better off applying for the credit cards which offer the tiered rate from the low to the high rate, rather than the cards which offer only a few rates with a large gap between one rate and the next.
This strategy should help you to determine which cards you wish to apply for based on your current credit standing.
Once the issuer has checked your credit history and determined your eligibility as well as the rate you will qualify for you may then choose to accept the credit card or decline.
Since you have already shaved several points off your credit score in allowing the issuer to pull a copy of your credit report, you might as well go ahead and accept the credit card even if the rate may not be what you had hoped for.
Will I Be Able to Have the Interest Rate Lowered at Some Point?
By making on-time payments and keeping the balance on your card to below 30% to 40% of your credit limit.. the issuer may agree to lower your interest rate after a year or so. At that time it certainly won’t hurt to call and request a lower rate.
Companies who offer low interest credit cards are actually very strict on the credit worthiness of the applicants.
As you well know.. it is always best to make an effort to keep your credit score as high as possible. Your credit score not only determines the interest rate you will pay on your credit cards and other purchases.. but many other services also favor those with higher credit scores.
If your credit scores are not as high as they could be, please see our section on tips for improving your credit.