If You Like to Use Your Plastic - Take Out an Introductory Purchase Rate Credit Card
One third of us never manage to pay off our credit card balance in full every month. In fact we owe a whopping £56bn on credit cards, which roughly estimates to £1,140 per card- holder! We all seem to concentrate on moving our balances between low rate or 0% APR balance transfer credit cards, but what about the additional purchases we make? Should we just take higher purchase rates on the chin, or should we use introductory purchase rate credit cards?
Let’s have a look and when it will and when it won’t be appropriate to use such a card.
When will an introductory purchase rate card be useful?
| | 1. Use it to finance a one off purchase that you know you will be able to pay back in the introductory time period – usually five to nine months. For example you could finance a brand spanking new stereo, laptop or home computer and stagger the payment throughout the introductory period. This could save you lots of money rather than opting for store cards or store loans which can charge as much as 29.9% APR!
2. If you rarely or never pay off the balance in full, but use your plastic regularly, you may do well to take out a credit card that has an introductory rate for purchases. These have purchase rates as low as 0% for the introductory period. |
When should I avoid taking out a low or 0% purchase rate credit card?
| | 1. If you pay off the balance in full every month there would be no benefit to taking out one of these low purchase rate cards as you are not paying any interest anyway! A cash back credit card or a reward card would prove to be far more beneficial.
2. If you have a large balance to transfer, an introductory purchase rate card is not for you. Although you would benefit from a low interest rate on anything else you purchased with the card, you would experience higher interest rate charges for the balance you transfer. If this is the case, you may want to consider searching for a credit card that offers both. There are some deals available that offer a 0% balance transfer rate and a 0% introductory purchase rate.
3. If you feel that you would forget when the introductory rate ends, you could be wiser to take out a long term low interest rate credit card rather than experience a huge increase in interest rates when the period ends. |
