Mbna True Line Gold Mastercard*
People looking to reduce the amount of interest they pay should consider a low-interest credit card like the MBNA True Line Gold card. You wont earn anything for your spending on the card, but the interest rate is just 8.99%, which is significantly lower than the average of 19.99% most other credit cards charge. If youre currently carrying a balance on a credit card with a higher interest rate, then you should also consider taking advantage of the optional balance transfer at the time of application. Balances transferred wont be charged interest for a full six months, which could save you bundles.
- Annual fee: $39
- Purchase interest rate: 8.99%
- Balance transfer offer: Optional balance transfer at 0% interest for the first 6 months
NOTE: this offer is not available for residents of Quebec
Tips When Your Credit Card Interest Rate Is Too High
August 29, 2016 by National Debt Relief
The credit card interest rate is notorious for being too high. Among the other types of debt, this is the one with the highest rate. This is the reason why you need to understand it carefully so you do not waste money paying interest on all your credit card transactions.
The truth is, there are several ways for you to avoid the burden of your credit card rate. You can simply pay off your balance in full and within the grace period of your billing cycle. It is only when you allow your balance to be carried over to the next month that the interest amount will be added and capitalized into your credit card debt. This is done through the finance charge.
According to a study published on NBCNews.com, one out of three card holders carries credit card debt to the next month. The data revealed that this statistic is higher compared to 2015. It also tells us that carrying over a balance is costly because of the high credit card interest rate. With the average rate of 15%, this can end up costing you unnecessarily. The thing is, this is a cost that you can avoid if you only know what to do once your interest rate gets too high.
We are not really sure how the economy will hold up in the next few years but one thing is for sure, there is a possibility that the interest rate will go up. You need to start acting now before the authorities make a move to raise the interest rate on your credit cards.
When Should You Ditch Your High
When is it time to say goodbye to a credit card with a high interest rate? If you are carrying a revolving balance on your credit card, youre likely paying a lot of interest on that balance every month. That means its probably time to look for a lower-interest option. Consider transferring your balance to a credit card with a 0 percent introductory APR period, which will give you the opportunity to pay down your credit card debt without accruing interest.
You might also want to ditch your high-interest credit card if it charges a high annual fee. Paying an annual fee on a card thats charging you high interest rates isnt a great option, and there are plenty of no-annual-fee credit cards that might better suit your needs. You can either ditch your card completely or downgrade your credit card to a no-annual-fee version.
If your high-interest credit card isnt costing you a lot of extra money in interest , you might not want to ditch your card quite yet. Having multiple credit cards is good for your credit score, so consider keeping your high-interest account open while you look for a new card with lower interest or better . Once you find a credit card you really like, you can make it your everyday spending card.
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Types Of Credit Card Apr
The majority of credit card companies offer various credit products that advertise a number of different types of APR. If you read the terms and conditions of a credit cardsomething everyone should do before applying for a cardyoull notice a range of different APRs. Many credit cards have variable rates and understanding the different types of APRs offered is critically important when evaluating card options.
Some of the most common credit card APRs include:
Here Are The Longest 0% Apr Credit Cards:
0% for up to 21 months from account opening
0% for up to 21 months from account opening on qualifying balance transfers subject to a balance transfer fee: 3% intro for 120 days, then up to 5%
12.99% – 24.99% Variable
0% for 20 billing cycles
0% for 20 billing cycles subject to a balance transfer fee: 3%
14.49% – 24.49%*
0% for 21 months subject to a balance transfer fee: 5%
14.74% – 24.74%
0% for 18 months subject to a balance transfer fee: 5%
13.74% – 23.74%
These cards benefit from $0 annual fees and require good credit or better for good odds of approval. None of these cards offer rewards, but they’re meant for financing rather than regular spending. You can always adopt the island approach and use a different rewards card for purchases you’ll pay in full each month. All of these cards also require good or excellent credit.
It’s important to note that some store cards may offer 0% interest for longer than 21 months, but they use deferred interest. That is, you earn interest on your balance during the 0% period but don’t have to pay that interest if and only if you bring your balance to $0 before the 0% period ends. The JCPenney Credit Card is one example, offering 18 – 60 months of deferred interest. But those cards are best avoided, because not paying your balance in full by the end of the intro period allows for a high APR to retroactively apply to your entire original purchase amount as if the low intro rate never existed.
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How To Decide: What Is The Best Credit Card For Me
To decide which credit is the best for you, you need to look at your priorities. If you normally carry a balance or you want to reduce your debt, then a low-interest or balance transfer card should be the only types you consider.
People who always pay off their full balance every month need to decide whether a travel or cash-back card makes more sense for them. Travel cards can offer lucrative rewards, but if you dont like to travel, theres no point in you getting a travel credit card. If this sounds like you, then a cash-back card may be the way to go.
Now that youve got your category of card selected, take a look at the earn rate, additional, benefits and which type of points you earn for each card. If you happen to spend a lot on gas and groceries, then look for a card that has a high earn rate for those categories.
The annual fee should also be a consideration in your decision making, but if you think youre getting good value out of your additional benefits and youre making more back than you paid with the fee, then it shouldnt be a big deal.
What To Expect From Cards With Low Aprs
Depending on the issuer, low-interest credit cards usually require a good credit score 690 or higher to qualify.
These cards may lack some of the bells and whistles of rewards credit cards, but they can save you money on interest if your account has a balance each month such as from financing a large purchase or transferring an existing high-interest balance to the card.
An ideal APR is a 0% introductory offer that lets you avoid interest payments for a period of time. The U.S. Bank Visa® Platinum Card, for example, offers a lengthy 0% intro APR period: 0% intro APR for 20 billing cycles on purchases and balance transfers, and then the ongoing APR of 14.49%-24.49% Variable APR.
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Foreign Cash Advance Fees
The fee for a cash advance outside of Canada is typically higher than it is in Canada. A foreign currency conversion charge may also apply to a foreign cash advance. Like a cash advance in Canada, youll need to pay interest charges from the date you take out the money until you pay back the full amount.
Immediate Steps When You Have A High
According to ValuePenguin.com, the average credit card interest rate by the end of 2015 was 13.66%. However, the type of credit card that you have and the perks will dictate how high it is. The data revealed that cash-back credit cards have the highest interest rates at 20.9%. It is followed by student credit cards with 19.8% and then by travel rewards card with 15.99%. The credit card with the lowest interest rate is business credit cards with 15.37%.
Of course, these rates can go up or down depending on what the market shows. But before these interest rates go up or down, you need to start making your move. There are 5 simple steps to take when you realize that your credit card interest rate is already too high.
Step 1: Stop using your cards.
Once you realize that the interest rate on your credit card is already too high, then you need to stop using it. Do not worry this is only temporary. You can still use your card but you have to make sure that you will do something about the interest rate first. Until you have come up with a plan, you need to stop adding to the balance of your credit card at least, this is applicable if you carry over a balance to the next month.
Step 2: Check your credit score.
Step 3: Check out other credit cards.
Step 4: Talk to your creditor.
Step 5: Decide whether to transfer or pay off your balance.
Here is a video that further explains how the credit card interest rate plays a role in your payments.
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How To Calculate Credit Card Interest Charges
1. Find your credit card’s APR
Your credit card’s APR will be listed in your cardmember agreement and on your monthly credit card statements.
2. Divide your APR by 365
An APR reflects the annual cost of borrowing, but credit card charges are assessed daily. Dividing by the number of days in a year gives you the daily interest rate or daily periodic rate for your credit card.
3. Multiply the daily interest rate by your average daily balance
Your average daily balance is the sum of your balances for each day in the billing period divided by the number of days in the billing period.
4. Multiply the resulting amount by the number of days in the billing period
When this calculation is done, you will have the interest charges due for the billing period. Just bear in mind that some details do vary by credit card company.
Whether you use WalletHub’s calculator or calculate credit card interest charges by hand, you should first understand the basics of how credit card interest works. We’ll highlight some key points below.
Is There A Maximum Interest Rate For Credit Cards
The short answer to this question is no. However, the longer answer is its complicated.
This is because of the , otherwise known as the CARD act. The CARD Act was signed into law in 2009. The law was put in place to provide card users with protections and greater disclosures relating to billing statements, interest rates, due dates and penalties for credit cards.
The CARD Act made it so that card issuers have to be more transparent about introductory interest rates, mandating that they be offered to the consumer for at least six months. The CARD Act also obliges card issuers to give cardholders at least 21 days notice before a bills due date and 45 days if their interest rate or fees will increase. Another big change the CARD Act made was that card issuers have to get a cardholders permission to process a transaction that takes the cardholder over their spending limit in a way that would incur a fee.
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Average Credit Card Interest Rates
Advertiser Disclosure: ValuePenguin is an advertising-supported comparison service which receives compensation from some of the financial providers whose offers appear on our site. This compensation from our advertising partners may impact how and where products appear on our site . To provide more complete comparisons, the site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.
Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
We examined about 200 credit cards from more than 50 issuers to get a sense of average credit card interest rates, or average credit card APRs, among card types. You can use this as a guide to see how your existing or potential APRs compare. If you’re carrying a credit card balance, consider our data to help figure out how you might lower your interest payments.
Best Store/retail Credit Card
If you regularly cross off your shopping list at Shoppers Drug Mart and Loblaws banner grocery stores , then the PC Financial World Elite Mastercard is a no brainer.
The premium, no-fee retail credit card earns between 45 to 30 PC Optimum points per dollar spent at affiliate retailers , and 10 PC points per dollar everywhere else you swipe the card . With over 4,500 retail and gas locations affiliated with the PC Optimum program, thereâs no shortage of opportunities to rack up bonus points.
PC Optimum points can be redeemed for purchases from Shoppers Drug Mart and Loblaws banner grocery stores in increments of 10,000 points for $10.
To qualify for the PC Financial World Elite, youâll need to earn an annual income of $80,000 . If you donât hit those minimum income requirements, the good news is you can still qualify for PC Financialâs other great no fee retail credit cards.
Why we like it:
Thanks to its impressive earn rates of between 4.5% to 3% and its partnership with some of Canadaâs largest grocery, pharmacy, and gas station brands, the PC Financial World Elite stands out for being one of the best no fee credit cards for purchasing household essentials.
It also doesnât hurt that the PC Optimum Points program is extremely easy-to-understand and flexible .
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How Much Will You Pay
The amount of credit card interest you pay each month can fluctuate based on your credit card balance and any changes to your interest rate. Your finance charge, which is how interest is applied to your balance, may be calculated in different ways based on your annual percentage rate and credit card balance.
Read the back of your credit card statement for details on how your finance charges are calculated.
Usury Laws In Different States
Usury refers to the practice of charging a very high interest rate that is deemed unreasonable. Each state has a different approach to usury law. For instance, if youre in South Carolina, the legal maximum rate of interest is set at 8.75 percent, but at 18 percent for credit card debt. However, usury law is not always so black and white. Many states defer to contract law instead of usury law. For example, in Hawaii the usury law sets the interest maximum at 10 percent, but a written contract can override that maximum. This is also the case in other states, including Arizona, Utah and Texas.
Another bit of fine print to check for is exemptions, since credit card lending may not be bound by usury laws. For example, in California the maximum interest rate is set at 10 percent, however, the law states that banks and similar institutions are exempt. This is also the case in Florida, Minnesota, and New Jersey, among others.
And then there is Colorado where a rate above 45 percent is deemed usurious for non-consumer loans. However, the rate for consumer loans is capped at 12 percent unless they are supervised loans, which includes credit card debt, made by a supervised lender.
If you want to know what the usury law is for your state, there are databases that offer state-specific information. Just keep in mind that your card issuer is not obliged to follow the usury law for your home state.
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Interest Rate Hike Should Spur Credit Cardholders To Act
The rate hikes ahead should give consumers one more reason to pay off their high-cost credit card debt and put a limit on how much they’re willing to borrow by tapping into a line of credit on a credit card.
The average credit card rate is 16.13%, according to data from CreditCards.com. Credit card rates vary based on your credit history with those with lower credit scores paying higher interest rates on their credit cards.
“Credit card debt is already very expensive and it will probably become even more costly in 2022,” Rossman said.
Back in 2010, the average credit card rate was 10.89 percentage points above the prime rate. The prime rate then also was 3.25%.
Most credit cards today don’t offer fixed rates. They’re variable rates that go up or down as short-term interest rates move up or down.
“The high end of the range what people with lower credit scores pay averages around 24%,” Rossman said.
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The annual percentage rates, for example, for an AARP Travel Rewards Mastercard from Barclays range from 16.74% to 20.74% to 25.74%, based on your creditworthiness. A 0% introductory APR is being offered for 15 months on balance transfers made within 45 days of account opening. The balance transfer fee is either $5 or 5% of the amount of each transfer, whichever is greater.