Should You Care About Credit Card Interest Rates?

Should you be concerned about credit card interest rates? Are there more important factors when deciding on what credit card to choose?

I was chatting with a buddy about all kinds of nonsense and then finally we got into credit cards (don’t ask me how). He asked me what I thought about a certain rewards based credit card. I told him that I’ve been using the same rewards credit card for a long time now. I praised the card and how I was able to get money back every year. He then asked me an important question that I never really considered.

What’s the interest rate like on your credit card?

The interest rate on the credit card is obviously important because that means more money out of your pocket if you carry a balance and the rate is through the roof. I told my friend that the credit card interest rate is a bit higher because you earn cash back. He was surprised that a guy that writes about personal finance would accept a higher interest rate. The truth is that I rarely carry a balance. Which also means that the interest rate isn’t that big of a concern for me.

My credit card usage is pretty simple. I use my cash back credit card for all of my purchases (large and small). Then I transfer the money over online often before the bill even comes in. Then at the end of the year, I get my cash back payment. That’s all there is to my credit card usage.

In the perfect world, a credit card is a free short term loan if you pay off your balance when you get the bill. You make the purchase on your credit card and then when you get the statement in the mail you pay it off. It should be that simple, right? Well there’s just one problem.

The truth is that I live in the way the world is, and not the way the world should be. When it comes to finding a credit card, you need to be realistic with your situation. If you plan on carrying a balance then you’re going to want the lowest interest rate possible. If you travel often, you’re going to want to earn points to earn yourself free flights once in a while.

Should you care about credit card interest rates? It all depends on how you plan on using your new piece of plastic. If you plan on carrying a balance then your main concern should be the interest rate. As mentioned above, if you have other goals, then you need to look into the points system or the opportunity to earn cash back.

Finding the best student credit card isn’t easy, but there’s a piece of plastic for everyone. You just need to look at all of the factors involved, such as, benefits, features, and costs.

There’s also the other side to the equation here. Do you even need a credit card? That’s for you to decide. I’m here to give you the tools to help you make an informed decision. You can check out the articles linked to in this piece or you can stay tuned for more articles on the topic of credit cards and credit card interest rates.

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