Types
of Interest Rates:
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Credit
Card Rates
 Compared
to other types of loans, credit cards have one of the highest
interest rates. A cash advance through your credit card,
for example, may cost you up to 24% in interest. Similar
high rates of interest may also apply to outstanding balances
or unpaid store purchases.
Since there are a number of different
interest rate levels associated with purchases and services
that you can avail of
through your credit card, it is sometimes hard to keep track
of the overall or bottom-line interest rate that you are
paying for.
Suppose you signed up for a credit card because
of a zero-percent balance transfer interest rate promotion:
while the balance
that you transfer from your old credit card will not have
any interest charge, be aware that any purchases you make
beyond
that (or cash advances) will usually be charged a high
rate of interest.
In addition, the rate of interest you actually
pay depends on the particular way your credit card company
handles
the payments you make. The monthly minimum payments on
some credit
cards may only be applied to accrued interest charges,
not on any amount you transferred from the balance of
your previous
credit card.
For borrowing small amounts of money, credit
cards may be convenient but you pay a premium for the ease
of accessibility.
The basic
interest charge for credit card cash advances is significantly
higher than the average unsecured loan. |
