How to Get a Low Interest Secured Credit Card

Finding a low interest secured credit card can be quite difficult. Since these cards are designed for people with less than perfect credit, most of the companies assume you will pay any interest rate they offer. This isn’t always the case, and there are plenty of ways you can find a secured card with a lower than average interest rate. Here’s how.

Be Realistic
Since secured cards are traditionally designed for those who won’t ordinarily qualify for other unsecured cards, the interest rates tend to be higher. While an unsecured card may have an introductory rate of 4% for purchases, you will probably not find these kinds of offers with secured cards. This doesn’t mean that you have to get stuck with a card interest rate of 20%. Just know that you will likely have to pay a slightly higher rate on a secured card.

Try to find a card that offers very few benefits. The more perks the card has, the higher the rates generally are. If you find a secured card that offers airline mileage, chances are pretty high that you will pay an interest rate that’s several points higher. The only thing you really need to be able to do with the card is charge on it. If you’re trying to rebuild your credit, forego the cash back and other rewards. You can always add these later on.

Pay it Off
A common misconception about credit cards is that you must allow your charges to revolve before it reflects positively on your credit. This is simply not true. A card that has a small balance that’s paid in full every month looks just as good on your credit score. The credit card company is only reporting whether you paid it on time, and the amount of any balance you carry. If you keep your balance low enough to realistically pay it off each month, then you will never have to worry about interest accumulating.

Avoid Cash
A great feature of having any kind of credit card is the ability to pull cash off of it should you need it. All credit card companies, regardless whether secured or otherwise, will charge a substantially higher interest rate of cash advances. The elevated interest rate can be as high as 26%, or higher. The other kicker is that when you send your payment in, it’s applied to the lowest APR balances first. This means not only are you paying a high rate for the cash, you’re going to continue to pay that rate until the card is paid off in full. Your best bet is to find a card that doesn’t even have a cash option so the temptation isn’t there.

Read the Fine Print
Reading the fine print can save you a fortune. Many card companies will offer one rate for a short period of time, then the rate increases. Some of them have some pretty unrealistic expectations of the consumer. If your rate jumps up and it was outlined in the terms and conditions, you can’t claim ignorance, and you’ll be stuck paying this higher rate. Understand completely what you are signing up for now to avoid paying a higher rate later.

Find the Best Credit Card

Credit Rating:
Plan to Use:
Top Feature:
Preferred Provider:
Find Your Card
blog comments powered by Disqus