Friday, November 10, 2006

What are Single Rate Credit Cards?

By Sarah Dinkins

There was a time when credit cards where just used for purchasing goods and financing unpaid balances. However, a number of other uses were introduced and different rates are charged. So, what is a single rate Credit card and how does it work?

The interest rate charged for financing an outstanding balance is different than the rate charged for withdrawing cash from an ATM, and different from the rate charged for overseas transactions or withdrawals. There are also interest rates charged for financing balance transfers, promotional no-interest periods for purchases, and many more.

Single Rate Credit Cards Explained

All these rates can get very confusing and you can easily loose track of all of them. But someone had a brilliant and original idea. And this time it seems that originality implied going back to the origins. Someone thought about charging a simple, unique interest rate for all financial transactions. And thus, Single Rate Credit Cards came to life.

There are no difficulties about this kind of credit cards. Any financial transaction you make, from financing unpaid balances, transferring balances, withdrawing money from ATMs, Buying goods abroad, etc. is charged the same interest rate. Thus, you can easily keep track of your expenses and avoid unwittingly exceeding limits.

Is a Single Rate Credit Card for me?

The answer to this question depends on your usual financial behavior. If you just use your card for buying goods because you don’t like carrying too much cash with you and you always pay the balance in full, you probably won’t make good use of this kind of credit card. A mileage Credit Card or other reward credit card might be a best option.

If you need a new card for transferring the balance of your previous cards and finance them, you’ll probably do better with a Credit Card featuring a 0% Balance Transfer promotional period. But only if you can repay the balance in full before the promotional period has ended, otherwise, a single rate Credit Card is a good choice, since the rate is lower than the rate charged by 0% Balance Transfer Credit Cards once the promotional period has ended.

Single Rate Credit Cards are best for people who use their credit cards for many different uses. Mainly if you use your credit card to make purchases but you don’t pay the balance in full, if you also use your card for making cash withdrawals or if you use your credit card when traveling abroad, you should probably get one of these Credit Cards.

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