Those with terrible credit generally know that they will be paying high interest rates if they are approved for a credit card. People with excellent credit expect to get the very best interest rates, but what about those with fair credit? The majority of people fall into the fair category.
Recent reports show that the average interest rate for a person with fair credit is 21 percent. This is up by a whole two percent from just last year. Five years ago, if someone with decent credit was paying 21 percent on their credit card other people would think that they were crazy. It is not the worst rate though. Just ask some people with bad credit who sometimes pay 29.99 percent for the privilege of having a credit card.
Credit card companies are smart. What they usually do is offer zero percent introductory offers. This practice has been gong on for years and they know it works. Consumers love it when they can get a credit card for a year or so and pay no interest on their purchases. Some of them will not use the credit card once the free interest period ends, or they will move on to another credit card that offers zero percent interest. These are smart credit card users, but the majority of people are not smart credit card users.
Credit card companies know that most people will run up a high balance and most likely have that balance when the interest free period ends. Then they can start charging them a profitable interest rate with the average being 21 percent. They know that they will not make money off of a few smart consumers, but they will make millions off of everybody else.
Nobody can blame the credit card companies. They are a business and just like any other business they are out to make money. By being a smart consumer, an individual can avoid paying high interest rates. Getting these zero interest credit cards are great for people to get. When you charge things, just make sure to pay off the balance before the interest free period ends. For some people, this is easier said than done, but a person will need to discipline themselves to get the full advantage of these types of offers.
A good thing to also remember is to try and avoid the cash advance offers that credit cards offer. A cash advance will almost always have a much higher interest rate than regular credit card usage. By being a smart consumer, a person can enjoy all of the benefits that a credit card can offer and pay minimal interest rates. Of course, they will also be building their credit history at the same time.
