Finding credit cards with low interest rates is an effective, and a surprisingly overlooked, way for consumers to reduce their debt and save money. The good news is that this does not have to be an arduous or time consuming process. With a small amount of preparation, a few key pieces of information, and a little persistence, anyone can learn how to be a confident and effective shopper for low interest cards.Approximately 55% of all credit cardholders carry a balance on their cards, and for these individuals in particular it's important to not only know how to find low interest cards, but to understand the general credit approval criteria used by card companies.
What you need to qualify
Credit card lenders each have their own separate set of approval guidelines, which is dependent on their risk appetite and other economic and business factors. Generally speaking, to get the cards with the lowest rates, a credit score of 720 to 750, or even higher for some offers, will be required. Lenders will want to see a clean credit payment history, a higher than average income, and a low debt utilization ratio. Debt utilization, or sometimes called credit utilization, is a financial ratio that measure a person's total credit balances vs. their total credit limits - and is a figure lenders watch closely when extending credit. To visualize how to calculate a debt utilization ratio - let's look at an example of a person whose only debt is 2 credit cards, each with a $5,000 balance. If this person has maxed out both credit cards (i.e., their amount owed equals the credit limit), his or her debt utilization will be 100%. Lenders would frown heavily on this scenario as it may appear that a person may be overextending or mismanaging their debt. A figure of 20% should be the target for any individual looking to obtain a card with a low rate.
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