While many of the nation’s top credit card lenders have made greater efforts to broaden their qualifications for opening new accounts, many consumers are still finding that the interest rates on those cards are higher than they may have been.
In the past, it was not uncommon to see interest rates on credit cards in the single digits, but these days, that’s very rarely the case, and consumers may still be shying away from using these accounts as a result, according to a report from the South Florida Sun Sentinel. These days, consumers with the highest possible credit scores will receive interest rates of about 13 percent on any new credit card they open, and those with the lowest ratings can typically expect to pay as much as 20 percent.
Of course, at the same time, consumers who are conscientious in their efforts to use cards wisely and responsibly can reap some other benefits, the report said. Because many consumers eschewed using their credit cards for many purchases during and immediately following the recent national recession, re-adoption of old borrowing habits have been slow to return, and lenders are now making greater attempts to incentivize this type of behavior.
One of the most significant ways this has happened has been in the increased value for rewards accounts that provide more benefits to borrowers, the report said. The higher interest rates are usually used to fund the increased rewards, many of which now incentivize certain types of purchases that most consumers make regularly, such as those for gasoline or grocery purchases.
As a consequence, savvy borrowers can actually take advantage of lenders’ eagerness to kickstart consumer credit card use again. This can be done by only spending as much on the cards as they can afford to pay off, and using an account that gives them more benefits for making purchases they would normally make anyway. As long as they’re not carrying a balance over from one month to the next, the cash back, points or miles they earn for spending on these cards essentially serves as a discount on their regular purchases. However, in many cases, the most generous rewards programs are only open to those with top-notch credit scores, so it’s important for those with lower ratings to keep in mind that they may not qualify.
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