October 4, 1997 in Nation/World

Low-Interest Credit Cards Can Help To Target Debt

The Orange County Register

Is your credit-card debt approaching the gross domestic product of some small nations?

Perhaps it’s time to think about moving your balances to a low-interest card.

The average credit-card interest rate these days is about 17 percent, but a growing number of companies are offering lower rates - anywhere from 8.5 percent to 13 percent.

On a $10,000 credit-card balance, the difference between a 12.9 percent interest rate and a 17.9 percent rate can translate into $500 in savings a year for a borrower.

Of course, the best strategy for dealing with debt is to pay it off as quickly as possible. But if cash is tight and you’re not making any headway, here are some tips for obtaining a low-interest credit card:

Check with banks in states with usury laws, such as Arkansas, where credit-card interest rates are capped by law.

Be patient when applying. Low-rate cards receive many applications from all over the country. Often, banks that offer low-rate cards are small or midsized. So the application process may be slower.

When applying for a low-rate card, don’t mention your plans to consolidate your other credit-card debt on the low-rate card. Some banks don’t like their cards used for that purpose. But make sure that balance transfers are possible.

Apply for the highest credit limit you can.

Do what you can to reduce your debt. Low-rate cards look for people who are not already over-burdened and have good debt-to-income ratios of under 35 percent to 40 percent.

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