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Here's a piece of advice you likely won't read anywhere else except in this article – you may not want to get a low interest credit card. Despite what you may have been told or read getting a low-interest credit card is not necessarily your best option. This is not to say that you should rush to apply for a credit card with a high interest rate but there are reasons why this sometimes makes sense. Of course, if you pay off the balance on your credit card every month it probably doesn't make any difference whether it has a high or low interest rate because you're not paying any interest anyway. But there is a case to be made for passing on those low interest credit cards and here it is. What's the difference between a good and bad credit score?
As mentioned previously if you do want a credit card with a very low interest rate you must have a very good credit score. But what is a good credit score? Lenders often look at credit scores as follows.
• Between 700 and 850 – Very good or excellent credit score
• Between 680 and 699 – Good credit score
• Between 620 and 679 – Average or OK score
• Between 580 and 619 – Low credit score
• Between 500 and 579 – Poor credit score
• Between 300 and 499 – Bad credit score
What this translates into is that if you have a credit score of 620 or higher you should be able to get whatever credit you apply for. However, to get the very lowest interest rate you would need to have a credit score above 700. And, of course, the higher the score the better. The overwhelming percentage of lenders use what's called your FICO score. It's available only on the site www.myfico.com. However, it would cost you $24.95 a month to get your FICO score monthly as well as your credit reports from the three credit- reporting bureaus. As mentioned previously, you can get your credit score free from a variety of sources and while it might not be your true FICO score it should be close enough that you would be able to see how creditworthy you are. It should also tell you whether or not you would be able to qualify for a very low interest credit card.
If you're in a financial position where you need to carry a balance forward from month-to-month then a low interest credit card might be your best bet, as it would save you the most money. Conversely, if you never or rarely carry a balance forward you might be better served getting a higher interest rate credit card that comes with perks such as cash back, airline miles or points. We know of people that will put a big ticket item on their credit cards to earn cash back but then turn around the next day and send a payment to the credit card issuer to cover the cost of the item to avoid having to pay any interest. If you could afford to do this then a higher interest rate might be a better deal than a credit card with a very low interest rate.