The ideal credit card practice in the eyes of most financial experts is to ensure that all balances are paid off on a monthly basis but in reality that is rarely the case for a large percentage of cardholders so finding a card with a low APR becomes a priority so that if they are going to carry a balance for a while it costs them less to do so.
The problem that many whose income is a little lower though is that many of the credit cards available to them actually have a rather high APR attached to them. This is not something a low income earner will benefit from in any way and it does make the danger of falling into unmanageable credit card debt even if they do not charge a lot to their credit card very real.
Therefore even though their lower income may limit the number of credit cards they are likely to be accepted for a low income earner should still look for a credit card offering with a lower APR over say, one that has a good rewards program but the trade off is a higher APR attached to the card, which is often the case.
What Is a Low APR Anyway?
The credit crunch has seen credit card lenders raise interest rates pretty much across the board, even on the higher end credit cards. Determining an actual figure that could be considered a low APR in this day and age is almost impossible. Most credit cards when you apply for them offer variable interest rate ranges and which you are charged will depend upon your personal credit score at the same (and other “special sauce” factors that lenders rarely reveal) therefore in order to determine just what a low APR is at any given time you will have to do a little research and figure out an average APR and look for something on the low end.
A low income earner is rarely going to have access to a very low APR credit card. There are credit cards out there that charge rates as low as 7% but they are usually higher end cards that call for a significant income to be demonstrated before they are issued. Here though are some credit cards that have a fairly good APR that you can consider if you are a lower income earner who has a credit rating that falls into at least the fair category:
The Orchard Bank Credit Cards
Several years ago HSBC took over the Orchard Bank credit card company and since the banking giant came into the picture the offerings have improved a great deal in terms of APR and membership fees, which were once criticized by many as excessive.
Offering both MasterCard and Visa options Orchard Bank credit cards come in several different kinds or “levels” – a secured credit card for those with the poorest credit, a classic, a gold and a platinum version. Which an individual applies for is determined by orchard Bank itself. When a user arrives at their website they fill in the pre application form and then once that information is input they are offered the highest level card that the bank is willing to offer them at the time.
The APRs attached to the cards are, like most credit cards, variable but for a sub-prime credit card (sub-prime being the term for a credit card available to and geared towards those with lesser credit scores and a lower income) they are relatively good, in line in fact with many other offerings designed for those with a higher income and/or credit score. The APR on all the unsecured offerings varies from 14.90%-19.90% and the initial fees are between 0 (on the platinum cards) and $39 (for the classic cards) with annual membership fees varying from $29 to $59 a year, except on the secured card which has no annual fee attached to it.
Capital One Credit Card Lab
Another place low income earners with average credit can head to see if they can qualify for a credit card with a relatively low APR is the Capital One Credit card lab at the banking giant’s main website. Capital one offer several different credit card options for those with average credit – also often known as fair credit – and have a pre qualification system similar to Orchard Bank’s. Input your details and after a ‘soft pull’ of your credit report (which will not affect your credit score) Capital One will offer you whichever credit card they feel you qualify for.
These cards range from a Capital One Secured Credit Card for those with the poorest scores who need to build up their credit to cash rewards and platinum offerings.
If you only qualify for a Capital One secured credit card it is still worth considering as the lender offers one of the better secured credit cards available anywhere. Your security deposit amount is determined by your actual credit score and can be as little as $49 for a $200 credit limit. The minimum credit limit on this secured card is $200 and the maximum security deposit is the same amount but is only charged to those with the very worst credit. There is an annual fee attached to this secured card and the APR is a not so low 22% but you do get regular credit limit increases once you establish a good payment record as well as the chance to upgrade to an unsecured Capital One card when you credit score improves.
The unsecured offerings that are available to those with fair credit include the capital One Cash Rewards card that actually offers a 12 month 0% APR option followed by a lower 17.25% regular APR. The annual membership fee is $39. Cash rewards are earned at the rate of 1% on most purchases but 2% on gas and groceries.
The Capital One Classic Platinum VISA does not offer a rewards plan but it does also have a 12 month 0% APR and a 17.25% APR thereafter and the first years annual fee of $39 is still reasonable.