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Credit card rates
Interest Rate Trends
How to Read the Average Rate Chart
Since a credit card is an unsecured revolving loan, credit card interest rates are closely related to the user’s credit score. Historically, with an excellent credit score (720+), users could expect to pay the prime rate or a few points above. With the current credit crunch, rates may be higher than in the past. On the other end of the spectrum, bad credit interest rates can vary drastically and will often include many additional fees.
These days it seems you can get a card from just about anywhere; banks, airlines, even through your college alumni association. So how do you choose? Well, getting one from your bank or credit union might be a good idea, if the rates and terms are good, since you’ll like have easy-access to online banking, which makes transferring a payment from your checking or savings account to your credit card a breeze. But again, shop around for the best deal just like you would for anything else. Credit Karma’s Credit Card Reviews is a great place to start.
Here are some benefits that come from using a credit card:
Not having to carry cash
No one wants to carry around large amounts of cash for the obvious safety reasons but it’s also nice to not have to worry about finding an ATM when you’re on the go. With a credit card, no matter what you need to buy, you always have exact change.
Carrying a balance
You can’t always outright afford the big-ticket items you’d like to have or the emergencies that come your way. A credit card allows you to pay off those larger purchases (or a series of smaller ones) over time, making the impossible purchase possible.
Improving your credit
Assuming all of the terms and conditions of the card you carry are met on an ongoing basis, your credit rating should improve over time. There is a limit to how many cards you should probably carry (around six) but up until that number you are proving yourself to be a responsible credit holder.
A credit card is a convenience worth having, but it can also be a headache and a detriment to your financial future if you do not abide by the terms and conditions or you max out your available credit.
- Going over your credit limit, being late with a payment, or any number of other “defaults” can, in some cases, trigger what’s known as rate re-pricing. Your interest rate could jump from as low as 0% APR to well above 30% APR, which obviously means carrying a balance would become a much more expensive proposition.
- Your credit score can be adversely affected if you default on your terms and conditions, especially if there is a pattern of abuse. A lower credit score will close the door to some lending opportunities you may have had access to otherwise.
- Though only paying the minimum payment is technically staying within the terms and conditions, doing so will cost you big-time in the long run. Credit card interest rates are generally higher than other loans and lines of credit and if your available credit to balance ratio gets too high that can also affect your credit score.
Make sure to read the terms and conditions very carefully to avoid entering into an agreement that is unfair or does not suit your spending habits.
For the last 10 yrs or so I had decided to live without credit and paid cash for everything I wanted including buying my house and card. Living debt free has been good. I learned whats more important and whats not.
Recently I have been helping my adult children and have been looking to buy another house, being willing to delve into credit to get the 2nd house for one of my children.
Initially bank offered me more than triple what I was asking as my collateral is good. But before sealing the deal they did a credit check on me and said since my score only showed in Equfax that they couldnt provide the load as they only rely on Experian,
Living debt free and using debit cards all these years didnt show up in any reports,nor did anything negative however, they then told me that i have to establish a positive credit history and to do so required getting a credit card.
I now have a Capitol One Platinum that I am using like my debit card and pay it off as I use it, so kind of like a debit only I have to manually pay instead of it coming out automatically. They told me that this will establish a positive credit history which in a few months might enable me to get the home equity loan I seek to buy my 2nd house with. I also learned I could get a reverse mortgage since I am 62 but I dont want to go that route as I plan on paying off the 2nd house quickly and do some renovations on my own home as well.
So I now come here to check my scores as I didnt realize the few lenders that swooped in on me after I was placed on hold by my bank, did that hard inquiry thing – 2 that I didnt ok – but they were confident they would ensnare me and did the checks anyhow even though I told them not to, As a result in 1 week I saw my credit score go down by 17 pts
! I called the ones who did it and told that since they inquired despite my telling them NOT to, that I found them to be unethical so I wont do business with them.I would put in a dispute however now I know not to even talk to lenders til I am ready with some established history that I hope mynew Capital One card will provide. I also learned that CapitalOne also has home equity so perhaps when i am ready I will apply with them. For now I just want to regain the 17 pts I lost and see that history appear on Experian and Trans Union.