Low-Rate Cards

There's nothing to dislike about a low interest rate, particularly if you tend to carry a balance. If you can slash your APR -- that is, your annual percentage rate -- from 15 percent to 6 percent, you'll save $131 if you pay 10 percent each month on a $1,500 balance. These days you can even find zero percent rates for the first six to 12 months.

But before you get too excited about a new card, make sure that you actually qualify for the low rate. A report by Consumer Action, a nonprofit organization, found that more than one-third of issuers don't provide a firm APR until after they have screened an applicant's credit history. This makes comparison shopping tricky. Even if the offer you receive claims you are "preapproved," don't believe it. "More than half the time you still don't get the rate offered," says Ed Mierzwinski, consumer program director for the Public Interest Research Group (PIRG), which monitors consumer trends.

What's more, "most cards do bait-and-switch," says Mierzwinski. You start off with a low interest rate but the slightest misstep can cause your rate to soar. For instance, you might send a payment in a few days late. Even if that slipup was with an entirely different card, your rate could increase on all your cards.

Advice: Read the disclosure statement that comes with the offer to find out what your APR will be once the initial teaser rate has expired. If it will rise above the average rate of around 12-14 percent, look for a different card. To avoid late fees, sign up for automatic payments online. This will help you maintain a good credit rating and a competitive interest rate. "Your credit score has to remain the same or get better for your rate to stay the same," says Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies.

Of course, issuers can change your rate at any time, provided they give you 15 days notice. If your rate does increase, call and negotiate for a lower rate. According to a study by PIRG, more than half of consumers who called their issuers successfully lowered their rates.