What is a low interest-rate credit card?
A low-interest, or low-APR, credit card offers consistently low interest rates to help keep your monthly credit card repayments affordable. This means you might not need to switch credit card providers as often.
What counts as a low rate for credit cards?
Any credit card that offers an annual percentage rate (APR) of below 8% is considered ‘low-rate’. APRs on conventional credit cards can often be more than twice that.
It’s important to note that up to 49% of people may never get the advertised APR for a low-rate credit card. That’s because when you apply, the provider may make you an alternative offer based on your credit rating and personal circumstances.
This will include any monthly bills you have like a mortgage and direct debits – so the rate you end up on can be higher than the one advertised.
What are the advantages of a low-interest credit card?
A low-interest credit card reduces the amount of interest you’ll pay over the lifetime of your credit card – and they usually have a low or non-existent yearly fee.
They’re suited to people who don’t want to keep switching from card to card, or who don’t want to be automatically switched to a high rate when their zero-interest deal finishes. For these reasons, low-APR cards are especially good for people who want to keep their household budgeting simple.
Like most other credit cards, low-rate cards are not good for making cash withdrawals: their interest rates usually only apply to purchases.
Paying off your low-rate credit card
There are some things you can do to make sure you don’t pay more than necessary for your low-rate credit card:
- Make at least the minimum repayment each month – this will be printed on your credit card statement
- Set up a direct debit so you never miss a repayment, as there is usually a fee for late payments
- Make more than the minimum payment each month so you pay your balance off quicker. Ideally you should pay off your balance in full each month, in which case you’ll pay no interest at all
- If you’re struggling to make payments, contact your credit card provider and see if it can help
What’s the best low-APR credit card?
When you're choosing a low-rate card, you should aim for the lowest possible APR. If you've already got a credit card and you want to move a balance across, make sure you compare interest rates.
This way, so you can be sure you'll make a saving by moving your balance over. You should also consider the following:
- Whether there’s an introductory interest-free period and how long it lasts
- Any annual credit card fees you’ll have to pay on top of your monthly repayments
- Which balance transfer fees you’ll need to pay if you want to transfer your outstanding balance to a card with an even lower rate
- Any extra fees you’ll have to pay for going over your credit limit or if you miss the monthly repayment
- Any low-rate credit card rewards that could help you save money elsewhere
How do you get a low-rate credit card?
Low-APR credit cards are usually only offered to people with very good credit scores, as they represent a certain amount of trust on the part of the lender. If you’ve shown that you aren’t responsible with borrowing, lenders are less likely to take a risk on you with favourable rates like these.
If you have spotty credit rating, there are other types of credit cards better suited to people with bad credit.
Beware that if you apply for a credit card and your application is rejected, there could be a negative effect on your credit score. So it’s important to check your eligibility before you apply for any type of credit card.
How to compare low-rate credit cards
Comparing low-rate credit cards with the MoneySuperMarket credit card Eligibility Checker is the easiest way to find the right credit card deal. Just tell us a few details about yourself and your finances and we’ll show you a list of credit cards tailored to your needs.
You can order the cards by the likelihood being approved, as well as the APR offered by the provider. You’ll also be able to see what rewards you might get, how much you’ll need to pay to transfer the balance to another card, and the provider’s customer review rating.
Keep in mind that the APR on a deal only needs to be offered to 51% of successful applicants. The rate you’ll actually be given will also depend on your financial circumstances and credit score.
Once you’ve found the credit card you want, just click through to the provider to apply. Remember that multiple credit applications can have a negative effect on your credit score, so you should make sure the card is definitely right for you before applying.
MoneySuperMarket is a credit broker not a lender. You must be 18 or over and a UK resident.