Credit cards can be a great way to free up cash flow while building your credit history, but they often come with expensive rates and fees. Whether you want to consolidate and clear your debt with a 0% balance transfer, pay no annual fee or save with a card with a low interest rate, make sure to compare the cheapest cards to choose the right option for your needs.
How to choose the cheapest credit cards
The cheapest credit card for you will depend on how you plan to use it. For example:
- If you want to pay off an existing balance over time, a card with low APR or a 0% intro APR period might be the cheapest option.
- If you hardly ever use your credit card or always pay your balance in full, it might be less expensive to get a card with a $0 annual fee.
- If you’re traveling overseas or shopping online, a card with 0% foreign transaction fees could help you avoid hefty conversion fees.
- If you’re using your card for purchases, you could opt for a card with a rewards program.
Types of cheap low-rate credit cards
There are a variety of credit cards out there that fall into this category. These include:
- Balance transfer cards. These cards often come with a 21-month 0% balance transfer offer. This can be used to transfer your balance from an existing credit card and pay off the balance interest-free. Be sure to pay off your balance before the intro period ends.
- Low-purchase-rate cards. This type of card offers a 0% intro APR period on purchases for as long as 18 months. Cashback cards are usually the ones that offer this perk in addition to 0% intro APR period on balance transfers.
- Low-cash-advance-rate cards. Cash advance APR is often the highest rate you pay with a card. It can be up to 30% and start accruing from the moment you make your cash advance or an equivalent transaction, such as gambling. Credit cards issued by credit unions typically have lower cash advance APR than bank-issued cards.
- Cards with no annual fee. For this type of card, you won’t pay a fee each year to own the card. Consider a card with an annual fee if you’re looking to earn higher rewards or get additional perks.
- Cheap cards for building credit. In most cases, the cheapest way to build credit is to use a secured credit card. The largest expense is a one-time secured deposit of either $200 or $300, which will act as your credit limit. But this is a returnable deposit and not a fee.
Low interest rate credit cards
If you think you can’t pay off your balance by the statement due date or if you regularly carry a balance, you can compare credit cards with low-interest rates.
These cards usually come with purchase APR between 9% and 13% variable or fixed. This is much lower than other types of cards which can have purchase APR of up to 26%. However, the APR you get in a credit card mostly depends on your creditworthiness, meaning you could still get low APR with other cards. But the lowest APR you can get starts around 15%.
Who are low interest credit cards best suited for?
- Good if: You want to pay off your purchases over time.
- Bad if: You always pay your balance in full.
0% intro APR credit cards
A 0% intro APR credit cards can be a great way to pay off an existing debt quicker and cheaper. These cards offer a promotional interest rate when you move existing debt to the new account or when you make a purchase and carry the balance.
The interest-free period can generally last from six to 21 months, depending on the card. At the end of the intro APR period, a standard interest rate will apply to any remaining debt.
Who are 0% intro APR credit cards best suited to?
- Good if: You want to consolidate your debt and pay off your balance without the burden of interest.
- Bad if: You travel often and you want to save money on foreign transaction fees or if you want to earn travel rewards.
No-annual-fee credit cards
There are two different types of no-annual-fee credit cards. Some give you $0 annual fee for the life of the card, while others offer 0$ intro annual fee for the first year. These credit cards are usually the cheapest option for people who pay back their card balance by the statement due date or who rarely use their cards.
Who are $0 annual fee credit cards best suited to?
- Good if: You rarely use your credit card or want to cut down on extra costs.
- Bad if: You want to earn higher rewards or get premium perks and benefits.
Rewards credit cards with no annual fee
Most rewards credit cards come with no annual fees. This means you don’t have to worry about weighing up the value of the rewards you could redeem with the card’s annual fee. Keep in mind, this type of card often has a high standard APR.
Compared to rewards cards with annual fees, these cards generally offer less competitive earn rates, smaller bonus point offers and fewer extra features.
Who are $0 annual fee rewards credit cards best suited to?
- Good if: You want to earn rewards while cutting down on standard card costs.
- Bad if: You want to take advantage of higher rewards rate and bonus point offers.
Credit cards with 0% foreign transaction fees
These credit cards are a cheaper option if you want to pay with plastic overseas. You can use a credit card with no foreign transaction fees to spend abroad or online with international retailers without paying the extra 1% to 3% foreign transaction fee that a lot of credit cards charge.
To put this in perspective, if a card charged you 3% for a foreign transaction worth $3,00, it would cost you an extra $90. These fees can quickly add up, so 0% foreign fee cards offer a cheaper alternative.
Who are 0% foreign transaction fee credit cards best suited to?
- Good if: You regularly shop online with international merchants or have an overseas trip coming up.
- Bad if: You want to earn cash back on everyday purchases.
Cheap credit cards for building credit
Unsecured cards for building credit can often cost up to $300 annually, but secured cards usually just come with a one-time fee. This makes them the cheapest option to build credit.
To use a secured card, you must make a deposit, which acts as your credit limit. You can get your deposit back if the bank upgrades your account to an unsecured one or if you decide to close your account and you have no outstanding balance. Other than that, the secured card can either have no annual fee or an annual fee of up to $39.
Who are credit cards for building credit best suited to?
- Good if: You have no credit history or if you have poor credit and want to improve it.
- Bad if: You need a 0% intro APR period to consolidate debt.
Compare intro APR credit cards
A card with an intro APR on purchases and balance transfers can be a cheap option for people who need to carry a balance for up to 18 months. You’ll also find many intro APR cards that earn rewards on purchases and don’t charge an annual fee.
How to compare low-rate credit cards
When looking for the right low-rate credit card, here are some of the features you’ll want to compare:
- Rewards program. Many credit cards come with rewards, either as a cash back or points for a partner rewards program. This can include rewards for hotels, airlines, cruise lines or a retailer such as Walmart or Amazon.
- Annual percentage rate. Paying low interest can save you lot of money in the long run. A 0% intro APR period is often the first choice, but you should also consider the ongoing rate after the intro period expires. So if you’re looking for an intro period, cashback cards issued by banks are often the way to go. On the other hand, credit unions rarely offer 0% intro APR period, but they offer way lower APR than their bank counterparts.
- Fees. Depending on how you use your card, there is a number of fees you can incur. Keep an eye on balance transfer fees, cash advance fees, late payment fees, returned payment fees and overlimit fees.
- Additional benefits. Possible benefits include complimentary insurance policies for travel, airport lounge access or free checked bags. Cheaper cards aren’t usually noted for being strong in this area but it still pays to factor this into your comparison.
Pros and cons of cheap low-rate credit cards
- Pay less in fees and interest
- May have smaller credit card surcharge when compared to more expensive cards
- Often easier to obtain
- Don’t earn as many rewards as premium cards
- Don’t offer as high a signup bonus as premium cards
- Don’t offer as many features as premium cards
The difference between a cheap credit card and an expensive one comes down to how you spend and repay your credit card balance. Depending on your preference, you can choose a no-annual-fee card, a card with no foreign transaction fee, a rewards card or a card with low or 0% intro APR period.
Make sure to compare your credit card options to find the right card for you.Back to top
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