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What are Cheap Credit Cards?
A cheap credit card is one that offers a low interest rate.
Cheap credit cards are normally only offered to people who have, not only a good credit history / score but meet the criteria for affordability in terms of personal income. People who with poor or no credit histories tend to be offered credit cards with much higher interest rates. This is because the risk for the lender is much higher.
In order to obtain a cheap credit card with a low interest rate, the customer must have been able to demonstrate over an extended period of time through their credit history / report that they were able to repay on time without missing repayments as well as showing that they meet the criteria in terms of income.
Another important factor that credit card companies and potential lenders will look at is the ‘Credit Utilization Ratio,’ often shortened to just CRU. When applying for credit, the lender will look at how much credit that the applicant is already using and how much of that credit is underutilized. The difference between the available credit and the credit used, can be viewed as a percentage score. For example, if a customer has $1000 dollars in credit available to them and they have only used $700 dollars, then they have a ‘Credit Utilization Ratio’ score of 70%. A high CRU is often seen by many lenders as red flag, and they typically look for a CRU below 30%.
