Save money on your credit card by paying lower interest rates
Comparing low interest rate credit cards can provide a lower interest solution, giving you the flexibility and convenience to spend and make purchases on your card whilst taking advantage of lowest interest repayments. Low interest rate credit cards offer promotional interest rates on purchases, balance transfers and cash advances. The information below will give you the knowledge and confidence to apply for your low interest credit card.
Comparison of Low Interest Rate Credit Cards
Rates last updated May 4th, 2016.
- Citi Simplicity Card
11.99% for 24 months if you apply and are approved by until 31 March 2017
April 5th, 2016
- Commonwealth Bank Low Rate Credit Card
BT offer extended + cashback updated from $150 to $250 and will be available until 30 June 2016.
April 15th, 2016
- Commonwealth Bank Small Business Credit Card - Low Rate
$250 cash back offer if you apply before 30 June 2016 and spend $500 on purchases by 31 July 2016.
April 15th, 2016
Complete guide to low interest credit cards
What is a low interest rate credit card?
Pay less interest with low interest rate credit cards. This type of credit card offers lower interest rates making it an ideal option if you carry a balance on your account/ don’t repay your balance in full every month. Low interest rate promotions can apply to purchases, balance transfers and cash advances.
Credit card interest explained
Credit card interest are the repayments made back to the financial institution for lending you credit. The longer you take to repay the sum, typically the more interest you will need to pay. The longer it takes to repay a purchase or cash advance, the more interest will be accumulated.
Types of credit card interest
- Purchase interest. This is the interest charged on your purchases – whether it be buying groceries at the supermarket, direct debits for bills (e.g: 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. Interest on cash advances generally ranges around 20% p.a. and is charged when you withdraw money directly from your credit card. 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 outstanding balance. 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.
What are the types of low interest credit cards?
- Standard low interest rate. These include credit cards that are often below 14% p.a. and have a low annual fee. This type of credit card has all the non-essential features removed to keep the price low.
- Low interest rate with introductory purchase rate. Introductory purchase rates allow you to make purchases whilst paying less interest. It is important to check how long the introductory purchase period is and what the interest rate will revert back to after that introductory period.
- Low interest rate with introductory balance transfer rate. This type of offer allows you to transfer your existing credit card balance at a lower interest rate and enjoy the perks of a low interest credit card.
- Premium low interest rate. While this credit card has a low interest rate it will also provide some platinum perks such as complimentary travel insurance.
How much money will I save by applying for a low interest rate credit card?
|Citibank Clear Platinum credit card (low interest)||ANZ Platinum credit card|
|Interest Rate||12.00% p.a.||19.74% p.a.|
|Credit Card Balance||$1,000||$1,000|
|Minimum Repayment||2% = $20||2% = $20|
|Amount paid including interest||$1,393.24||$2,119.11|
How to compare low interest rate credit cards
Here are some of the most important things you should look for when doing a card comparison.
- 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.
- Interest free days. If your credit card doesn’t have an interest free day period then you will immediately get charged interest. Have a look out for any offers like 55 days interest free days, but please keep in mind that these offers usually apply when you’ve paid back the balance in full by the due date listed on your statement.
- Introductory rates and balance transfers. 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 right low rate credit cards, you will come out ahead in the end.
- Revert rate. After the introductory period of your balance transfer or purchase rate, it is essential to know what the rate will revert to. Sometimes it can revert back to the cash advance rate, which on average can up to 20% more. By reading through the terms and conditions properly, you will save yourself from any nasty shocks.
Fees and charges
- Annual fee. Try to find a 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.
- 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.
Extra tips to help you compare and choose a low interest rate credit card
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. Choosing a low interest rate credit card can seem like a no brainer. But getting the most benefit can actually require a lot of research.
- Extra benefits. Aside from the lower interest rate ask yourself what other features may benefit your needs. Comparing different types of credit cards can inform you to the other benefits available.
- 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 15 months’ worth of purchases with 0% interest.
Are low interest rate credit cards suitable for you?
Low interest rate credit cards are suitable for people who are looking to take advantage of lower interest rates to help them manage their budget and purchases. If you pay off your balance every month then you may like to compare other types of credit cards.
A low interest rate credit card may benefit you if:
- 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
A low interest rate credit card may not be suitable for you if:
- 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
- Your credit history is poor
- You have had problems in the past making payments on time
Pros and cons of a low rate credit card
- You pay less interest on purchases you make after the interest free period passes.
- If you’re a regular credit card user who doesn’t clear their balance each month then you could save a lot in interest charges, compared to a card that has a higher rate.
- If you want to reduce and consolidate your credit card debt, low interest credit cards can help. You may be able to combine all your credit card balances onto one card and reduce the balance.
- Sometimes its may be possible to pay zero interest on balance transferred, for a set period of time. If you’re committed to paying off your debt, then a low rate credit card is a good place to start.
- You need to know what type of purchases will qualify for your low interest rate. If your applying for a balance transfer with zero percent, the low introductory rate only applies to amount that you’ve transferred from your previous card.
- Even with low interest, timely payments are very important, some credit card companies could revoke the introductory rate period and charge a higher rate.
- You have to do your homework, while low interest rate cards can be a great benefit if used properly, they can a huge disadvantage if you don’t fully understand them.
Frequently asked questions about low rate interest cards
How do promotional interest rates work?
Does the low rate apply to all transactions?
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. You can compare no foreign currency fee credit cards to avoid this charge.
When is purchase interest charged?
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.
How do interest free days work with the promotional rate?
Interest free days provide an extension with 0% interest on your purchases when you pay back your credit card balance in full by the specified due date. If you have a 0% purchase promotion, interest-free days will have no effect until the 0% promotion has ended.
How do I apply?
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 their secure online application service. There is no fee for applying from this page.
I have bad credit - can I still get a low interest card?
Most credit card providers require a strong credit history to be eligible for a low interest credit card.