Compare the Best Low-Interest Credit Cards
Carrying credit card debt or anticipating not settling the balance in full at the end of each month? Then, a low-interest credit card may save you a lot of money in the long-term. Credit card debt can be challenging to pay down; however, high-interest simply compound the problem
Typically, you’ll secure the lowest interest rates with credit unions. Major credit card providers will offer purchase and balance transfer annual percentage rates (APRs) of at least 14%, which is still relatively high. Whether a low-interest credit card right from the start or transfer your balance to one, you can save in both interest costs and time it could take you to clear your debt.
Find the Right Low-Interest Credit Card for You
Finding the right low-interest credit card should be rather straightforward—right? After all, the lowest APR would prove most attractive. However, the annual fees can more complicate things considerably.
Ultimately, finding the right low-interest card will come down to analyzing its benefits, and determining whether your savings on interest outweigh its annual fees.
Benefits of Low-Interest Credit Cards
Low-interest credit cards play a simple role—reducing the amount of interest you owe if you’re unable to pay your balance in full every month. Here are other reasons you should consider having this card in your wallet.
- Savings. These credit cards are a cheaper option since you pay lower interest on purchases. This will help you save money and avoid getting into unmanageable debt.
- Easier budgeting. With low-interest credit cards, your rate is fixed for the life of the card lifetime, so budgeting will be simpler.
- Low annual fees. Most low-interest credit cards carry an incredibly lower annual fee compared to regular credit cards.Often, there is no annual fee.
- Promotional offers. Besides a lower APR, these cards sometimes offer 0% promotions on balance transfers and purchases. This allows you to avoid interest altogether for a specific introductory period.
Low-Interest Credit Cards FAQ
What is a low-interest credit card?
A low-interest credit card provides a low-interest rate over a long (typically fixed) period. The average APR of standard cards is currently about 17%, while the APR on low-interest credit cards could typically range between 6% and 10%. Some credit cards will offer a lower introductory APR (sometimes as low as 0%), but it lasts only for a designated promotional period. After that, your interest rate returns to the standard rate.
How do low-interest credit cards work?
Instead of perks and rewards, a low-interest credit card simply helps you save on interest costs. After all, if you anticipate carrying a balance, it makes little sense to chase rewards, as interest costs will quickly outpace any other benefits you might accrue. Low-interest cards work like any other card except that you will pay less in interest charges for carrying a balance to the next month. The rate will obviously be several points lower than the national average.
What rate can I get with low-interest credit cards?
A low-interest rate on your credit card is one that’s below the national average. Your rate is stated as an APR, which is the yearly cost of borrowing money. It comprises your interest, fees and other charges presented as a percentage amount.
The rate you scure will vary based on aspects like the type of credit account and your creditworthiness. You won’t be charged any interest if you pay off your balance in full every month. Moreover, you might also get a grace period of about one month to clear your bills and avoid interest through a 0% introductory APR. You can get a rate as low as 6% with a low-interest credit card.
Can anyone get a low-interest credit card?
Anyone can apply for a low-interest card however, you stand a higher chance of approval with a better credit score. Good-to-excellent credit will help you quickly qualify for this type of credit card.
Besides using a low-interest card to pay less interest, you can use it to make cash advances and balance transfers. Whether you carry a balance on one or several cards, you can conveniently transfer them onto a low-interest card. This will translate into a single monthly payment at a lower rate.
How do I compare different low-interest credit cards?
When it comes to comparing different low-interest credit cards, knowing your credit score helps you know which cards you qualify. Credit card applications and websites often indicate the credit score range they require, which helps you avoid applying for cards you’re less likely to qualify for. Start by reviewing the interest rates and fees of the cards you’re considering.
Credit cards will also charge different APRs for various types of transactions. A card might have one APR for balance transfers, another for purchases and a different one for cash advances. There could also be a penalty APR, usually a higher interest rate for missing a payment. Make sure you understand the APR on the card you’re applying.
Take time to find out the fees a credit card charges. These may include a cash advance fee, an annual fee, a late payment fee and a foreign transaction fee. And if you’re planning on making a balance transfer to your new card, calculate the fee for the transaction.
Low-interest credit cards will offer a 0% introductory financing period, so be sure to confirm how long the period lasts, the type of transactions that qualify for the introductory promotional rates and the interest rate that takes effect once the introductory period lapses.