Low Interest Credit Card Offers – What You Need To Know

Understand how a low interest credit card offer can save you money on an existing debt.

Be aware of the potential pitfalls of this type of card so that you can gain full advantage from them.

Low Interest Credit Card from Bankwest

The Bankwest Lite MasterCard was awarded by Money magazine, the Cheapest Credit Card for 2010, sporting Australia’s lowest purchase rate for a MasterCard credit card, and a great low interest balance transfer deal.

• $59 annual fee
• 10.75% p.a. on purchases
• 1.99% p.a. for 9 months on balance transfers
• Cash Advance Rate of 21.74%

Click here to read the Bankwest Lite MasterCard terms and conditions

For anyone who is paying interest on a credit card debt, a low interest credit card offer could be the answer. These allow you to make balance transfers from credit cards provided by a different issuer, and enjoy a significantly reduced rate of interest. At the moment there are twelve-month deals at 1.99%, which will make a pleasant change from your current rate, which will range from 10% to 20%.

With so much debt as a result of the global financial crisis, it is not surprising that consumers are flocking to these cards in the hope of reducing their burden. People with larger debts can easily save hundreds of dollars by taking advantage of a low interest credit card offer.

However, consumers are always advised to read the fine print before signing up for low interest credit card balance transfers. It is common practice for special offers to be the bait with which credit card companies “catch” new customers, and although many offers are genuinely backed by a great range of features, some may not be as attractive once the banner headline is torn down and the fine print scrutinised.

The key point to watch out for with low interest credit card offers is the revert-to rate – that is, the interest rate that any unpaid part of the transfer will be subject to once the offer period has expired. This is usually the regular purchase interest rate, which will be within the aforementioned 10% to 20% range. But you should not assume this is so, because some cards may have a revert-to rate that equates to the cash advance interest rate of the card, and that is rarely less than 20%.

You must also be aware that low interest credit card offers are only of benefit if you do not use your card for any purchases whilst the transfer remains unpaid. The industry rule is that your repayments will always go to reducing your cheapest debts first, which means your more expensive purchases are put to the back of the queue, and keep on attracting their higher interest charges until your transfer is fully paid off. And don’t think that you will be protected by your interest-free days feature – that only operates if your balance was completely cleared the previous month.

Finally, you will only be able to transfer a balance up to 95% of your new card’s credit limit, so make sure that the new provider sets a high enough limit that you can shift the entire debt over. Low interest credit cards generally charge an annual fee, so you should be looking to get full value for your money, which may not happen if you are leaving a chunk of your debt behind on your old card.

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0