Avoid High Interest Charges On Credit Card - Low Interest Rates Vs Grace Periods

Credit Card is a very convenient way to make payments without the hassles of carrying hard cash around at the time of shopping. As more and more people are opting to use credit cards, the card companies are cashing in on the volumes of the customer base and thus increasing their earnings by way of interest.

The term 'grace period' used in the field of credit to define the period within which you can settle your credit card bill, without paying interest. The grace period lasts for about 25 to 30 days before the interest rate becomes applicable. The best way to avoid paying interest is to pay the outstanding balance before the due date. However, most credit card companies are beginning to stop the practice of awarding grace period, but charging a low fixed interest rate. It remains to be seen which offer is better among the two.

Those cardholders who prefer to pay their credit card bills by the due date would prefer to opt for those cards, which offer grace period. Some credit card companies begin to charge interest from the day the charge slip is processed. This happens if you are withdrawing cash via the credit card. Even if you pay the credit card bill within the due date, it is always better to have a card that gives some amount of grace period, even though they may charge a small rate of interest. For those who usually carry forward a balance beyond the due date, would find cards charging a minimum rate of interest to be more convenient for their payment schedules. At times, some credit card companies waive the membership fee for the first year. This is another saving in the cost of the card.


Credit Card Companies, in a bid to increase their customer base, make attractive offers like 'premium' credit cards and gold cards. These credit cards offer travel insurance benefits, security benefits in case the credit card is lost or stolen, no balance transfer fees, etc. However, premium or gold cards have a high membership and monthly fee, a point that may not be highlighted at the time of marketing of the card. These types of cards prove to be very expensive in the end and are best avoided. Cards offering grace period are much more practical, cheap and convenient to use.

Low interest credit cards and 0% interest cards are a good option to select. However, their term is limited to 6 months or a year, depending on the policy of the credit card company. There may be a minimum service charge or annual fee applicable for these types of credit cards.