Finance Space

Most credit card companies today offer low or 0% interest rates for the first 6 months and sometimes longer. While this can be a great way to save it can also be dangerous. The motive of the company is to start you out with no interest so that you will build a high balance on the card without the ability to pay it off, and then when the introductory rate is up interest will begin building on that balance and they will begin making money.

However, if you are looking into getting a credit card- getting with little to no interest for the first 6 months to a year is always a good option. This way, you can begin to get a feel for what it is like to have a credit card and how the payment system works. Hopefully in the first few months having no interest will allow you to build good payment habits so that when the interest does begin building you have a set payment schedule

The danger in these types of credit cards is that once the introductory rate passes and interest does begin building, the rates are usually very very high between 15 and 20%. Obviously the longer you keep the card the more diligent you are with payments the more likely the company is to decrease your rates.

Credit cards such as this, are usually good for first time credit card holders to get a feel for how having a credit card feels. It is a good learning tool for people like students or new graduates who are just starting out in their own personal finances. Just be weary of the soon to come high interest rates when the introductory rates pass!

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Tags: bad credit, credit card, Personal Finance