Low rate credit cards becoming a rare breed
As low rate credit cards are amongst the most difficult type of card to be accepted for, it is worth looking at how your credit ratings can affect a decision. The "Credit Crunch" is making credit card applications 20% more likely to be rejected than six months ago, and this figure is rising. In the future, credit card companies may even begin to cut back on their low rate cards as they try to make more profit for their shareholders in this difficult time.
Low rate credit cards are often seen as the best type of card to have. As their name suggests, they have a low interest rate, which remains low for the life of the card and not just for a limited offer time period. Because of this, balances can be paid off gradually over a number of months without the worry of suddenly having to pay a massively increased APR on top of the standard repayment charges. Having said this, because of the low rates, banks make less money on these cards and are only willing to give them out to an elite few.
So who holds this information on your credit rating? There are three credit-referencing companies in the UK and all three hold similar data files. Financial service companies often reference at least two or even all three of these companies to get a more rounded idea of what you would be like as a customer.
If you still feel that a low APR card is the best one for you, there are ways to improve your chances of being accepted by the credit card companies. The most important thing to do is to improve your credit rating. Your credit rating data is held by three companies in the UK and is a record of your repayment habits, the amount of times you have applied for credit and so forth. It is checked by financial providers before you are accepted for any financial service. If you have a poor credit rating, you are more likely to be rejected for a card. In the past, financial companies have chosen to overlook minor flaws in an applicant's credit history. Nowadays, they are far more particular.
If you find that your credit history is less than glowing then don't panic - there are a number of things that you can do to improve it. As credit reference agencies monitor the way you handle credit, the best way to improve it is to deal successfully with other types of credit. For example you can apply for a store card and use it frequently, paying the balance off in full each month. Or you could take out a small loan. You have to prove yourself to be a model customer. As a result, you are more likely to be accepted for other cards in future.
Certainly the number of low rate credit cards is declining. However, they will not die out entirely. If you have set your heart on this type of card then it would be better to start working on your credit rating than applying willy-nilly and potentially damaging your chances of acceptance because of numerous rejections. Consider why you want a low rate card, as there may be something else on the market more suited to your needs. If you want to transfer an existing balance then perhaps a 0% balance transfer card would be better. If you want to make a cash purchase then take a look at the 0% on cash purchase cards instead.
Low rate credit cards are often seen as the best type of card to have. As their name suggests, they have a low interest rate, which remains low for the life of the card and not just for a limited offer time period. Because of this, balances can be paid off gradually over a number of months without the worry of suddenly having to pay a massively increased APR on top of the standard repayment charges. Having said this, because of the low rates, banks make less money on these cards and are only willing to give them out to an elite few.
So who holds this information on your credit rating? There are three credit-referencing companies in the UK and all three hold similar data files. Financial service companies often reference at least two or even all three of these companies to get a more rounded idea of what you would be like as a customer.
If you still feel that a low APR card is the best one for you, there are ways to improve your chances of being accepted by the credit card companies. The most important thing to do is to improve your credit rating. Your credit rating data is held by three companies in the UK and is a record of your repayment habits, the amount of times you have applied for credit and so forth. It is checked by financial providers before you are accepted for any financial service. If you have a poor credit rating, you are more likely to be rejected for a card. In the past, financial companies have chosen to overlook minor flaws in an applicant's credit history. Nowadays, they are far more particular.
If you find that your credit history is less than glowing then don't panic - there are a number of things that you can do to improve it. As credit reference agencies monitor the way you handle credit, the best way to improve it is to deal successfully with other types of credit. For example you can apply for a store card and use it frequently, paying the balance off in full each month. Or you could take out a small loan. You have to prove yourself to be a model customer. As a result, you are more likely to be accepted for other cards in future.
Certainly the number of low rate credit cards is declining. However, they will not die out entirely. If you have set your heart on this type of card then it would be better to start working on your credit rating than applying willy-nilly and potentially damaging your chances of acceptance because of numerous rejections. Consider why you want a low rate card, as there may be something else on the market more suited to your needs. If you want to transfer an existing balance then perhaps a 0% balance transfer card would be better. If you want to make a cash purchase then take a look at the 0% on cash purchase cards instead.
About the Author:
Sophie Wright has been researching credit cards and the UK Card offers and is keen to create awareness about the offers availble to consumers by using compare credit card sites.
posted by Debt Consolidation Loan at
3:30 AM
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