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Compare the top low rate cards

Pay less in interest charges on your everyday spending - Data last updated on 15 Dec 2017

Now showing 1 - 10 of 10 low rate cards
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Most people would agree that the worst part about having a credit card is paying it off. Low-rate credit cards are designed to make this process a little easier, offering interest rates that are lower than those dished out by the competition.

This makes credit cards with low interest rates theoretically easier to manage, especially for those on tight budgets, but that doesn’t mean they’re right for everyone.

We’re going to look at low-rate credit cards, and the pros and cons of these financial products, so you can determine whether a credit card with a low interest rate is right for you.

What is credit card interest?

When you borrow money from a credit provider, you’re charged interest on the amount of funds you have used (assuming you don’t repay the debt during any interest-free period). This is credit card interest. Think of credit card interest as the cost you pay the credit card holder for the right to borrow the funds. Different credit cards have different credit card interest rates, and this should be something you consider when determining which is the best credit card for you. When you add up credit interest with additional fees and charges, it’s easy to see how quickly people can find themselves in financial trouble when choosing the wrong credit card. 

How is credit card interest calculated?

Credit card interest is charged each day on the amount of debt you owe – assuming that you’re not in an interest-free period.

Most credit cards offer an interest-free period, which usually begins not on the day you make a purchase but on the first day of a statement cycle. For example, imagine your credit card has an interest-free period of 55 days; and imagine your statement cycle begins on April 1; and imagine you make a purchase with your credit card on April 10. In that case, the 55-day interest period for that purchase would begin not only April 10 but on April 1. So for that specific purchase, your interest-free period would be only 46 days.

Low-rate credit cards are theoretically easier to manage as they offer people seeking credit lower interest rates on repayments, which can potentially make managing your credit budget much easier.

What are the different types of credit card interest?

If you are in the market for a credit card with low interest rates, it’s important to understand the different types of credit card interest that typically come as part of your card.

  • Purchase rates – These are the interest rates that are incurred when you make everyday transactions like buying your groceries or paying for a bill online.
  • Cash advance rates – This is the amount of interest you’re charged on any cash transactions. When withdrawing cash from an ATM or supermarket checkout, purchasing foreign currency or performing international money transfers, you may be slugged a cash advance rate.
  • Promotional and introductory rates – Many credit card providers offer promotional and introductory rates as an incentive for signing on. These credit card rates are generally lower for a limited amount of time, before eventually reverting to the usual (higher) rate.
  • Balance transfer rates – This is the rate of interest you’re charged by the credit card provider when you perform a balance transfer from one credit card to another.

How is a low-rate credit card different from other credit cards?

As the name would suggest, a low-rate credit cards are credit card that offer consumers lower interest rates than the competition.

Low-interest-rate credit cards are generally seen as no-frills products on the credit card market, as they typically do not have the bells and whistles of other products in terms of perks and bonuses. But due to their comparatively lower interest rate, they’re theoretically easier to manage.

One thing to consider before signing on the dotted line however is what the lower interest rate applies to. The low interest rate may only refer to the credit card’s purchase rate, and it is possible to have a credit card with a low purchase rate but a high cash advance rate, for example. This is why you must be careful to read the fine print when comparing low-rate credit cards.

What should I look for when choosing a low-rate credit card?

When you’re in the market for a new low-rate credit card, there are many factors you should consider to ensure you’ve got the right credit card for your lifestyle, needs and budget.

  • What is the purchase rate? – This is ultimately the figure that is going to determine whether your low-rate credit card is a good deal. If you’re going to use your low-interest credit card for everyday purchases, generally the lower the purchase rate, the better.
  • What fees will I have to pay? – When comparing low-rate credit cards, another factor you must consider is the fees. Credit cards typically have annual fees, administration fees and late fees that are incurred when you miss your payments. These fees can quickly spiral out of control, potentially negating the benefits of the low-rate credit card you’ve selected.
  • Does the card come with any perks? – Low-rate credit cards typically don’t have as many perks and bonuses for members as credit cards with higher interest rates. But the credit card rewards offered by your low-rate credit card is still something that should be considered when determining which low-interest-rate credit card is the one for you.
  • Is the low interest rate fixed? – Another important factor to consider is the permanence of the rate. If your low interest rate is part of a promotion or introductory offer, after a set period of time your credit card will revert to a higher interest rate which could potentially make the credit card a less attractive prospect for some consumers.

What are the pros and cons of low-rate credit cards?

Low-rate credit cards can be a good fit for some consumers, but that doesn’t mean they’re always the right choice. Here are some of the pros and cons of low-rate credit cards:

Pros

  • You can lower your interest repayments – One of the biggest advantages of a credit card with a low interest rate is you will have lower monthly interest payments than if you had a higher-rate card. Low-interest-rate credit cards can offer interest that is significantly lower than competitors, leading to potentially large savings.
  • You can potentially reduce your credit card debt – Transferring your credit card debt to a low-interest card can be an effective way to manage credit card debt in some situations, as you will save by not having to pay the higher interest rate of your other card.

Cons

  • They don’t have the perks of other credit cards – Low-interest credit cards generally offer fewer rewards and perks than higher-rate cards. This can be a turn-off for people who are looking for fringe benefits.
  • Balance transfer fees – Many low-interest credit cards have significant balance transfer fees, which is something to be aware of if you’re looking to transfer your credit card debt to a credit card with a lower interest rate.
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FAQs

Credit cards are a personal responsibility, so the reasons behind getting a credit card should also be personal.

You should always consider all the pros and cons of taking out a credit card before you sign on the dotted line.

For example, pros include the fact that credit cards can be a good way of paying for purchases, earning rewards points and building a credit history.

But there are also cons – credit cards can be expensive and put a lot of financial pressure on you.

You need to consider your personal finances and your lifestyle choices. Do you need a credit card? What options are out there for me? Can I handle the repayments? Why am I getting a credit card in the first place?

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