Low Interest Rate Credit Cards
Comparing low interest rate credit cards can provide a lower interest credit solution giving you the flexibility and convenience to spend and make purchases on your credit card whilst taking advantage of lowest interest repayments.
To help in choosing which card to apply for, we have listed below low interest VISA, MasterCard and American Express credit cards.
Low Interest Rate Credit Card Offer
The ANZ Low Rate offers a low interest rate on purchases and balance transfers with a low annual fee.
- 0% p.a. for the first 9 months on balance transfers then reverts to the standard variable rate on purchases currently 13.14% p.a.
- $58 annual fee
- Up to 55 days interest free credit on purchase2
- Up to 3 additional cardholders at no additional fee
- MasterCard acceptance at over 29 million locations worldwide.
Comparison of Low Interest Rate Credit Cards
Low Interest Credit Card Comparisons
Complete Guide to Low Interest Credit Cards - Everything you need to know before you Apply!
Table of Contents: Guide to Low Interest Credit Cards
- Why you shouldn’t look past a low interest credit card
- Comparison of Low Interest Credit Cards
- How is interest calculated?
- How do low interest credit cards work?
- How to compare low interest rate credit cards
- How to use a low interest credit card
We have provided all the information you need below to give you the knowledge and confidence to apply for your low interest credit card today, and begin saving money and reducing your credit card debt. Our guide will begin with the basics through to the finer details to ensure you have a complete understanding of Low Interest Rate credit cards.
Why you shouldn’t look past a Low Interest Credit Card:
Low interest cards provide the following key benefits:
- More affordable for making purchases on your card. You are able to make purchases on your card and repay them at a low interest rate, keeping down your credit card balance.
- Reduce your credit card balance and repayments. Paul Clitheroe, respected financial commentator, and chief commentator for Money Magazine recommends that if you are on a credit card with 15% interest or more, you should opt for a balance transfer to a lower rate credit card to pay off your existing card
- Ideal if you have a revolving credit balance. If you don’t completely pay off your card balance each statement, then it is important to have a low interest rate to ensure you pay the least amount of interest to your bank, taking advantage of low interest rates and saving you money in the long run.
What is Credit Card Interest?
Credit card interest is basically the repayment credit card users make back to banks for lending them credit. For instance, a financial provider allows you access to $2000, and the longer you take to repay the sum, typically the more ‘interest’ you will have to pay.
The longer it takes for you to repay a purchase or cash advance, the more interest will be accumulated. Credit card interest rates are also known as ‘APRs’ (Annual Percentage Rates).
Rates are given in figures of ‘p.a.’ (Per Annum). For instance, 10% p.a. implies that your credit card balance with accumulate 10% of its value in interest per year.
However, your credit card’s interest won’t accumulate in yearly periods – it accumulates daily, as a ‘Daily Percentage Rate’.
Although interest rates are given as an ‘Annual Percentage Rate’ (APR), such as ‘11.99% p.a.’ it is important to note that interest does not accumulate on a yearly basis. Your purchases will grow in interest every day on a ‘Daily Percentage Rate’ which can be calculated by dividing APR/365.
Low interest rate credit cards are typically most suited to people who can’t make the ’55 day interest free period’ regularly. If you take advantage of the 55 day interest free period too often, the interest rate becomes obsolete and you’re credit card spendage is going to waste when you could be accumulating reward points on a rewards credit card.
With 55 days interest free on purchases being available on practically all credit cards, you don’t necessarily have to pay any interest at all.
What types of interest are charged on a Low Interest card?
- Purchase Interest This is the interest charged on your purchases – whether it be buying groceries at the supermarket, direct debits for bills (eg: memberships, or paying bills by credit card. On this page we have highlighted the purchase interest rates from each credit card in the table above to make it easy for you to compare the cards with the lowest purchase rate.
- Cash Advance Interest When you withdraw money directly from your credit card this is known as a cash advance. Cash transactions include ATM withdrawals, transferring funds from your low interest card to another bank account using telephone or internet banking
- Special Interest Special interest refers to interest charged on other amounts or transactions including balance transfers.
- Interest On Interest This is interest that is charged on any outstanding balance on your card as a result of the above three types of interest above, and is charged on your outstanding balance from your last statement period.
How is interest calculated on a low interest rate credit card?
Our easy to follow diagram explains how interest will be calculated on your new credit card:
How will I save money by applying for a Low Interest card?
Here are some key advantages of applying for a low interest rate card:
- Pay less interest on credit card purchases. With a low rate, when you make purchases on your card and if you don’t pay them back within the interest free period, you will be charged interest but at a lower rate meaning you will have a reduced interest repayment.
- Apply for a low interest card with a 0% for 6 months balance transfer offer. A balance transfer allows you to transfer your existing card’s balance on to your new low interest credit card and pay 0% p.a. interest for 6 months. At the end of the balance transfer period interest rate on the balance will return.
How much money will I save by applying for a Low Interest card?
This depends on your existing credit card balance and your spending habits. You can use our credit card calculators, and the details of the cards in our comparison table above to calculate how much you will save.
- Use our Balance Transfer Calculator – if you are planning to do a balance transfer
- Credit Card Repayment Calculator – if you want to work out the repayments on your new card
Jack makes a $1000 purchase on his credit card which hasan interest rate of 10% p.a. He repays the purchase 50 days later.
If he took a year to repay his purchase, he would repay $1100, with $100 of interest (10% of 1000 = 100)
His daily percentage rate would be 10/365 = 0.028%. Since his purchase took 50 days to repay, his interest repayment would be 0.027% of ($1000 x 50 days) = $13.70 of interest paid after 50 days. (Note: All calculations were rounded to 2 decimal places)
How and where can I apply for a Low Interest Card?
Go back to the top of this page and select a card from the comparison table, then click the Apply button. This will securely transfer you to the relevant banks website, and when you complete the application it will be through there secure online application service. There is no fee for applying from this page – consider it our favour to you!
Now you know everything there is to know about Low Interest Credit Cards!
How Do Low Interest Rate Credit Cards Work?
If you find that you are not able to pay off your credit card balance every month in full, low interest rate credit cards are your best choice in a card. You do not have to pay an enormous amount of interest if you carry a balance forward from month to month any longer. Gone are the days when a 20% interest rate was acceptable. You can find very low rate cards that are packed with extra features to help keep your debt under control.
How low interest rate credit cards work
Any time you make a purchase with the credit card you are borrowing money and using credit. You have the option of repaying the entire amount when you receive your statement by post, or you can pay a smaller amount and carry the rest of the balance over to the next month. You will be required, however, to pay at least the minimum requirement, which is usually 2% of the entire balance.
If you decide to use credit and borrow the money for a month you will have to pay an interest charge,. This interest is different from card to card, and it is up to you to do a card comparison to find the best low interest credit cards you can.
Transactions – When you read the advertising for low rate interest cards you might assume that this rate is applied to all the transactions you make. This gets a lot of people into trouble because they don’t realize that the rate only applies to purchases and not to any other transactions necessarily. Most cards have a separate interest rate for cash withdrawals, balance transfers and other transactions done on the card. If you are not aware of what interest rates apply, you can end up getting quite a surprise at the end of the month when you receive your statement.
Another thing you should know is that a cash withdrawal does not only apply to taking money out of an ATM machine, but it also applies to buying traveler’s checks, foreign currency and making any type of gambling transaction.
If you use your credit card abroad you may have to pay extra fees. Almost all credit cards have a foreign transaction fee, which is charged whenever the card is used overseas. Usually this amount is about 2.75% of the total transaction amount.
Low Interest Credit Card Comparison Checklist
Here are some of the most important things you should look for when doing a card comparison.
1. Annual fee – Try to find the best card that meets your needs and has the lowest annual fee. The annual fee should not be a deciding factor for choosing the right low interest rate credit cards, but if you find two cards that are very comparable the one with the lowest annual fee should win.
2. Interest rate – When you are comparing interest rates you want to look for the lowest APR. This is the annual percentage rate including the annual fee and interest charges. It is especially important to find low interest rate credit cards if you are not able to always pay off your balance in full every month and will probably have to pay some interest charges from time to time.
3. Introductory rates – You may be able to find a great deal on a card with very low introductory rates. Some cards will even offer a 0% interest rate on purchases or balance transfers for a limited amount of time. If you want to transfer a debt over from an existing card, or have a big purchase that you want to make, you may want to look for one of these deals. If you use smart shopping to pick out the best low rate credit cards, you will come out ahead in the end.
4. Rewards programs – If you’re the type of person that likes to collect points and save up for rewards then you should look for a card that offers this type of scheme.
5. Hidden fees and charges – You should find out what types of fees and charges apply to the card. You will be able to find out this information by reading the small print on the website before you fill out your application. You may be charged a fee for using an ATM, for using your credit card abroad or for various other transactions. If you find out all about these charges then you’ll be better prepared to use your card resourcefully.
Low interest rate credit cards are best for people that cannot always pay off the balance every month. Many Australians are in that situation right now and that is why these low rate cards are so popular. It is nice to know that you are covered if you can’t make the whole payment one month, and that’s what a credit card is supposed to represent anyway: a form of security when times get a little rough.
How To Compare Low Interest Rate Credit Cards
There are so many different types of credit cards available, so choosing the right one for you can be a daunting task. Low interest rate credit cards are one type of card that can a good money saver, but only for the right type of consumer. Read on to learn if a low rate credit card is right for you.
Getting the right credit cards to meet your shopping and repayment needs is key to saving the most money. Credit card policies are not a one size fits all deal. What saves the most money for one consumer might actually cost another consumer hundreds of dollars more than they should be spending.
Are low interest rate credit cards right for you?
Low interest rate credit cards are one extremely popular type of cards, but how do you know if they are right for you? You should consider low rate credit cards if you are the type of spender who likes to uses their card regularly and carry a balance, small or large, over longer periods of time.
You should look into a low interest credit card if this describes your spending and payment habits:
- You use your card regularly to make frequent purchases
- You make your payments on time, but typically don’t pay them off in full
- You have a good, well established, credit history
- Your income is stable and consistent
Getting qualified for low interest rate credit cards can be difficult, but it is well worth it if you use your card a lot and tend to have a balance from month to month. Low interest credit cards are essential to keeping your interest rate low.
You will have to have a proven credit history to be able to qualify for low rate credit cards. This is because the credit company will not make as much money off of you in interest. They are willing however to make a trade off of some profit for low risk and reliability. To make sure that they are getting reliable consumers, many credit card companies are willing to agree to lower interest rates. But they will not give a low interest card to someone who has a poor credit history. You have to have a proven record to qualify for these exclusive low rates.
How to know when low interest credit cards are not the ones for you.
Not every consumer will qualify for a low interest credit card. Also, many consumers that would be eligible to qualify for low rate credit cards might be able to find a better deal elsewhere. So do not assume that low interest credit cards are the smartest option for you just based on the fact that you have the credit history to qualify for one.
You should stay away from low interest rate credit cards if any of this describes you:
- You don’t use your card very often
- You tend to use your card to make large purchases and pay them off right away
- You almost always pay your balance in full from month to month
- You always pay off your balance before the end of interest free periods
- You are looking for a way to consolidate and transfer your balance to another card
- You have little or no credit history
- Your credit history is poor
- You have had problems in the past making payments on time
- You have been unable to meet past credit card payments due to a lack of money
Low interest credit cards do not meet the needs of every consumer. They are great for people who regularly use their credit cards and tend to always carry a balance. Consumers who do not use their cards in this manner should take a look at comparing low interest rate credit cards but should not limit themselves to choosing one.
Consumers who keep a credit card to use on rare occasions for large purchases should probably not pick a low rate credit card. Especially not if you plan to pay the balance off in a short amount of time.
If this is how you tend to use your card, you would be better off looking at credit cards that allow for a 0% interest rate for a fixed amount of time, usually up to a year. These cards are great for those who use their cards occasionally and pay them off within a short period of time. If that is how you tend to use your card, having a low interest credit card instead would actually wind up costing you more in interest, despite the low rate.
You should also stay away from low rate credit cards if you are looking to transfer your balance from another card. There are better options for consumers who use their cards this way.
If you can qualify for a card with an introductory 0% interest rates on balance transfers, then this may be a better way to go. As long as you pay off the balance before the introductory rate expires. However, if you are going to be keeping the balance for a long time, you still may want to consider a low interest credit card.
Low interest rate credit cards are not the best options for everyone, but for the right consumer they are an extremely smart decision. So based on this information, if you think a low rate credit card is right for you, continue on to Part 2 of this article to learn how to choose your card.
After you have determined that low interest rate credit cards are the right choice for you, you still have to decide exactly which one to pick.
Picking a specific card can be just as hard as deciding what type of card you will like. There are just so many different features, fees, and options to look at.
Low interest rate credit cards tend to be fairly simple as far as credit card policies go. The main feature of the card is obvious: a low monthly interest rate. Thus one of the first things you should look at is the rate of interest you will pay on your balance.
Consider the features and fees to see if you are getting a good deal
Low interest rate credit cards offer a low rate to reliable and qualified customers because it can help save them money. You will want to make sure that your low interest card doesn’t gouge you with other fees.
You want to make sure the rate and fees for these features are low as well:
- Low interest rate (obviously)
- No annual fee
- No cash transaction or cash handling fee
- Low foreign transaction fees
- Low introductory rates
- Extra features
These are just the basic features you should keep in mind when choosing amongst different low rate credit cards. Depending on how you use your card, some features will be more important to you than others. Here we will discuss the important features in greater length.
The most important feature: a low APR
It should go without saying that the most important aspect of low rate credit cards is their interest rate. The APR refers to the interest rate charged on the purchases you make over a period of one year. The APR also would include the annual fee associated with your credit card. Many low interest credit cards do not charge an annual fee. This is ideal for pretty much every credit card user, because it is a fee that everyone would have to pay otherwise.
Getting the lowest APR possible will depend on the strength of your credit score, which measures your overall credit history as a consumer. You will have the best opportunities if your credit score is high. To qualify for a low APR you might also have to make higher minimum payments. These features ensure that you will be a reliable customer for your credit card company, which enables them to give you a special, competitive rate.
No cash transaction or case handling fee
This is one of those features that may or may not pertain to the way you use your card. If you plan to use your low interest credit cards to make cash transactions, you will want to make sure that the low interest rate still applies. Cash transactions include making ATM withdrawals, receiving cash back when you make a purchase, and the purchase of traveller’s checks or foreign money. Even gambling purchases can be considered a cash transaction. These types of purchases may not be eligible for the low interest rate and may also have other fees.
Balances fees, foreign purchases fees, and other fees
Credit cards love to charge fees for their services and even low interest credit cards are no exception. You need to watch out for the interest rates and fees associated with balances that result from extenuating circumstances, such as from balance transfers or from purchases made abroad. You should make sure that the low rate credit cards you look at will not charge excessive amounts in these situations.
Introductory promotions and other specials
Low interest rate credit cards may also offer a number of different promotions to draw in new customers. They may offer super low rates initially, or a rewards program to offer you different ways to get a small return from the purchases you make. None of these features are absolute essentials, but they are extra features that many consumers really like. One of the most common bargains is an introductory interest rate of 0% for as long as a year. This would be great if you are considering making a large purchase, can pay it off within a year, and want to put it on a credit card. Low rate credit cards may also offer a rewards program where you can accumulate points based on the purchase you make with the card.
You can redeem these points for cash, gifts, or other neat specials. Just remember that these types of features are extras and not essentials when it comes to making a decision. Low interest credit cards can be an extremely smart decision for the right consumer. You will need to have a strong credit score and credit history to qualify for these cards. If you think you can qualify for them they are well worth the time to look at, since credit card companies are willing to offer better deals in exchange for a reliable consumer base. Low interest rates, no annual fees, and low or no fees on many of the other features are what you want to look for when you are comparing different low interest rate credit cards.
Not all cards will offer the same features. You want to make sure that the card covers all the important bases, such as having no annual fees and a low APR, before you look at the other fees. When you look at the various fees associated with the different cards, feel free to take into account how often you will use the service. If you never plan to travel abroad, it might not matter to you if their foreign transaction fee is high. Only after all of these things are considered should you look at the extras and bonuses offered by the card companies.
How To Use Low Interest Credit Cards
There are two aspects to low interest credit cards. On the one hand, they’re great if you fall into the habit of not paying the full statement every month. On the other hand, if you leave debt to keep mounting up – even at a low interest rate – you’re still faced with paying it off one day.
We all know that feeling. You get your monthly statement from your credit card company and your first thought is ”I don’t recall using it so much this month” and then you realise you don’t really have the ready cash to pay it all off.
The good part is that even if you still have some outstanding debt, at least it’s on low interest credit cards and your bills won’t get out of control. Nonetheless, you should still try to budget your income so you have a day-to-day oversight of your spending and your savings.
Managing Your Account Online
The best way to achieve this is by making use of the online account management services that low rate credit cards generally offer these days.
An online account management service lets you view your low interest rate credit cards‘ statements on a secure website at any time of your choosing. The security of the website is important because it means no-one else can look at your financial dealings. But you can see exactly how much is outstanding on your low rate credit cards and you can make payments as you go to cover the bill, rather than waiting for a big bite out of your savings at the end of the month.
An outstanding feature of online account management is that many banks and building societies offer this service for all their products, not just low rate credit cards. This means you can look at, and deal with, all your accounts at a kind of one-stop shop.
The Egg credit card goes a step further. You can add all your accounts to the Egg management service, even if your accounts are not with Egg. Now that’s a really helpful service. Be sure to add all your low interest credit cards to this service.
Security, Security, Security
A word of warning. Having one place to manage all your accounts is great but you must keep it secure. Never respond to any online or email request for your account details or password. No bank or any other financial institution will ever ask for your details by email, even if the email looks absolutely authentic.
When choosing your low interest rate credit cards, take a careful look at the rewards programmes or interest-free periods on offer.
If you manage your spending on your low interest rate credit cards carefully, you could wind up with some very good extras like travel, supermarket vouchers or even cash back.
Similarly, low interest credit cards can offer quite generous interest-free periods like other credit cards. If you’re in the habit of paying off your card in full, you can enjoy up to 59 days interest free credit on your purchases or even cash transactions.
Tips To Help You Compare & Choose A Low Interest Rate Credit Card
Choosing a low interest rate credit card is a no-brainer, right? All you have to do is look for the lowest interest rate. But getting the most benefit from this no-brainer requires quite a bit of brain work.
Low interest rate credit cards imply that, even if you don’t pay off the bill in full each month, you don’t get slammed with big interest charges on the unpaid balance. So if you are in the habit of using your credit card to make your regular purchases and then you don’t pay the bill in full at the end of the month, you won’t be severely disadvantaged.
When you’re checking out the best low interest cards for you, don’t just stop at the lowest interest rate. Here are some tips on what to look for and how to do it – and get the most out of your credit card.
Check For Extras
See if there’s a loyalty offer attached. Some banks or building societies will offer an even lower interest rate if you have a current account and a credit card with them, in other words, if you have more of your business with them. What’s the situation with cash transactions? If you’re going to use your low rate credit cards to get money from an ATM, buy foreign currency or travellers’ cheques, do a little gambling or get cash at the supermarket checkout, look for a card that offers a low interest rate on cash transactions. Not all of them do. Otherwise, it’s best to use your debit card. A debit card avoids any interest charges on cash transactions and there are no handling fees. With some credit cards, it’s best to check out the fine print thoroughly. Some cards make you pay off your purchase and balance transfer transactions before you can pay off your cash transactions.
Introductory Rate For a Low Rate Card
There can be an extra benefit if the bank or building society offers a special or even free introductory rate. You can use that limited period to make those one-off transactions like transferring a balance in from other cards at a very low or zero interest rate. It may also be the time to make a big purchase without being hit with a high interest rate if you don’t pay off the full balance at the end of the month.
Check out the length of the interest free period the card offers at the end of each month. Remember, the longer the interest free period, the more free credit you are getting and the more money you’re saving.
The Joys Of Capitalism
An added inducement for getting a low rate card is an offer to give you cash back just for using the card. That’s right! They pay you for doing what you were going to do anyway.
And while you’re checking out the differences between low interest rate credit cards, always remember to ask that most basic of questions – is there an annual fee?
Don’t make the mistake of thinking the low interest rate on your card is always fixed. Most rates are variable and move in line with changes to the cash rate announced by RBA.
When Low Rate Cards Should Stay In Your Wallet
Low rate cards are not good for large one-off purchases like white ware for the home or big pieces of furniture. If you’re going to make those kinds of purchases, do it with an introductory rate credit card, which sometimes give you 10 months’ worth of credit at a zero interest rate.
Nor are low rate credit cards good for balance transfers where you’re trying to consolidate all your credit card debt onto one low rate card.
Summary Of Tips
So, in summary, here’s a list of tips and questions to help you get the best out of your low interest credit cards:
- Choose your card after careful research.
- Is there an annual fee?
- What is the introductory interest rate?
- How long does the introductory rate last?
- What is the long term interest rate?
- Is there a loyalty programme attached to the card?
- Is interest charged on cash transactions?
- Can you get cash back just for using the card?
- If you put a lot of business the card issuer’s way, will you get an even lower interest rate?
- Is the interest rate on the low rate card fixed, or does it vary with the central bank’s monthly decisions?
- How long is the interest free period you get on the unpaid balance at the end of the month?
When Low Rate Cards Are Not Good
Low rate credit cards are the wrong tool to use when you’re making big one-off purchases.
If you must have that refrigerator, or that super king size bed, or that simply divine French antique marble-topped bench for the kitchen, put the credit card away and go for the debit card or the 0% interest rate introductory card instead.
Similarly, when you’re consolidating all your credit card debt onto one card, don’t necessarily put it on a low interest credit card. You may want to use a 0% balance transfer card or a long term balance transfer credit card.
To seek more information read the terms and conditions of your chosen credit card and seek advice from a financial advisor.
Frequently Asked Questions about Low Interest Credit Cards
Question: When is purchase interest charged?
A: For cards with an interest free period, interest is charged on the last day of your statement period. Purchase interest is charged from the day the transaction takes place until the end of the statement period.
Question: What are interest free days?
A: Interest free days allow you a grace period to avoid paying interest on your credit card by paying back your credit card balance, in full, by the specified due date.
Question: Can I avoid paying Interest?
A: Yes. If you pay off your purchase within the interest free grace period, then you are paying $0 in interest repayments back on your purchase, no matter how expensive it was. However, interest free/grace periods do not apply to cash advances.
* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from. ‘Best and ‘Top’ are ratings which are subject to our consideration and is not rated against all Australian credit cards. We recommend you take this information into account when comparing credit cards.
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