A low rate credit card can help you cut down on costs and pay off your balance faster by charging a lower rate of interest than other credit cards. While low rate credit cards typically offer a competitive, ongoing interest rate for purchases, some also offer an introductory 0% interest rate for purchases or balance transfers that can also help you save on charges during the promotional period.
Use this guide to compare low rate credit cards, including those that offer 0% p.a. interest for an introductory period. You can also find out how much you could save by switching to a lower interest rate credit card and learn about the different features to compare, so that you can choose a credit card that works for you.
Low rate credit cards give you a way to save on debt from new purchases by offering an ongoing interest rate that is lower than the purchase rates offered by standard credit cards. This means the amount of interest you pay on your balance will also be lower compared to what you’d be charged on a card with a higher rate. While credit cards in Indonesia typically have interest rates of 26.95% per annum (p.a.), low interest rate cards offer standard variable rates as low as 8% p.a. Some cards even offer introductory 0% interest rates on purchases for a fixed period of time.
If you regularly pay with plastic and carry a balance on your credit card, a low rate credit card can give you the flexibility to pay off your balance over time, without the higher interest charges of some other cards. But if you have a large existing credit card debt and want to pay it off, you may want to consider doing a balance transfer to another card instead. Or, if you always pay your balance in full, a card with a low annual fee or extra benefits such as reward points might make more sense.
How to compare low interest rate credit cards
Here are the key factors you should consider to help you find a low rate credit card that works for you:
Interest rates
Put simply, the lower the rate, the less interest you’ll pay. But when it comes to interest rates, all of the following factors can have an impact on your potential savings and costs:
Promotional interest rates. Some credit cards give you an introductory low or 0% interest rate for purchases or balance transfers. This is usually the lowest rate you’ll get on a credit card and is only available for a limited time. So this type of rate can be useful if you have planned purchases or existing debt that you want to pay off. But keep in mind that when the introductory period ends, the low or 0% introductory rate will revert to a higher standard variable rate. So always check the standard rate to make sure the card you’re applying for provides an ongoing low interest rate.
Standard interest rate. This is the interest rate that’s usually applied to your credit card balance. Usually, there are different standard variable interest rates for purchases, cash advances and balance transfers. If you get a card with an introductory 0% interest rate, the “standard” or “revert” rate is also the interest rate that applies to any balance remaining at the end of the introductory period.
Cash advances. The interest rate for cash advances is usually higher than the rate applied to purchases. This rate is charged for transactions such as ATM cash withdrawals, foreign currency purchases and gambling. Cash advances also aren’t eligible for interest-free days.
Interest-free days. If there’s an interest-free period for purchases (and you’re eligible for it), interest won’t be calculated for those purchases until after that period ends. However, interest will usually apply in full if you don’t pay off the total owed by the due date on your statement.
How are credit card interest rates calculated?
Credit card interest rates are usually advertised based on the annual rate that applies to the account, shown as “per annum” or p.a. However, interest on your account balance is typically calculated daily and then charged monthly on the statement due date.
Fees and charges
Annual fee. Annual fees typically range from IDR0 for cards with basic features to IDR3,500,000 or more for prestige cards. Try to find a card with a low annual fee, but don’t make this your sole deciding factor. In some cases, a card with a low interest rate could offer you more value than a IDR0 annual fee, particularly if you’re carrying a lot of debt.
Other fees and charges. Fees may apply when you use your card at an ATM, overseas, online with international retailers or even when you apply for a balance transfer. Make sure you’re aware of the relevant charges that apply to your card.
Additional features
Low interest rate credit cards often have fairly basic features. However, more premium cards could offer some of the following benefits:
Complimentary extras. Gold, platinum or black low interest rate credit cards may include perks such as travel insurance, purchase-protection insurance or concierge services. If you use these extras, they have the potential to offset costs, such as the card’s annual fee.
Rewards. Most low interest rate credit cards don’t offer reward points for your spending because these features serve different purposes.
No international transaction fee. If you plan to use your credit card when you travel overseas or shop online with international retailers, a low rate credit card that waives foreign transaction fees could help you save even more money.
Pros and cons of low interest rate credit cards
Pros
You’ll pay less interest on purchases, which can make it easier to manage your credit card debt.
Many low interest rate cards also have low annual fees.
You can often combine low interest rate cards with other features such as balance transfers or zero foreign transaction fees.
Cons
You’re less likely to receive reward points and other perks.
You may not qualify if you have a poor credit history.
If you opt for a card with a 0% purchase rate, it will only be available for a promotional period.
If you often carry a balance, a low interest credit card could help you save on charges. Just remember to consider the other features, such as introductory offers, annual fees and complimentary extras, to help you find a card that best suits your needs.
FAQs about low interest rate credit cards
If you want to learn more about low rate cards, check out these answers to common questions. If you have a question of your own, you can also get in touch with us using the comment box below.
With this type of credit card, the “low interest rate” description refers to the purchase rate of the card. This is the interest rate that’s applied to most transactions you make. It usually doesn’t apply to cash advance transactions, including cash withdrawals, gift card purchases, foreign currency purchases, gambling transactions and some government service transactions.
This depends on the credit card and any applicable balance transfer offers. If the card allows balance transfers, it may come with a 0% interest rate for a promotional period before reverting to a standard rate. Some low interest rate cards apply the standard purchase rate to balance transfers after the introductory period while others apply the cash advance rate.
Yes. Low interest rate credit cards also have a cash advance rate that applies to cash advance transactions. Depending on the card, the cash advance rate will apply to any or all of the following: cash withdrawals from an ATM or supermarket, foreign currency purchases, gift card and prepaid debit card purchases, gambling transactions, government charges and balance transfers after the introductory period.
When you compare credit card rates, it’s important to consider both the purchase rate and the cash advance rate (as well as any promotional rates) so that you can find a card that’s affordable based on how you plan to use it.
There is no one “best” low interest rate credit card in Indonesia. With so many cards on the market, the individual features have an impact on how well a card is suited to your circumstances. So the card that’s right for you may not be right for someone else. Comparing low interest rate credit cards based on the features you’re looking for will help you find a card for your individual needs.
Credit card interest rates are variable, which means they can change regularly. So the lowest interest rate card can vary depending on when you’re comparing cards. Just keep in mind that the lowest interest rate credit card could be listed as one with a promotional 0% interest rate.
There isn’t a single “cheapest” credit card option because everyone uses credit cards differently. There are also other costs to consider beyond the purchase rate, such as annual fees and interest rates for cash advances or balance transfers. On the flip side, some people might find cards with high rates and fees “cheap” because of all the complimentary extras.
Simply put, the term “cheapest credit card” is really subjective and varies from person to person. So when you’re trying to find a credit card that’s affordable, make sure you consider all of the potential costs based on how you plan to use the account. That way, you’ll be able to find one with rates and fees that are affordable for you.
Most low interest rate cards offer an interest-free period on purchases, up to a set number of days in each statement period. However, interest-free days are only available for purchases if you pay your balance in full by the due date on each statement.
Yes, you will still have to pay at least the minimum amount for each statement period. Depending on your credit card provider, this is usually around 10% of your total balance. If you want to avoid interest charges, you’ll need to may higher repayments to clear your balance before the end of the promotional 0% interest period.
Although the interest rate advertised is a yearly (per annum) number, credit card interest is actually calculated daily based on your average daily balance. It’s then charged to your account at the end of each statement period.
Most low interest rate credit cards do have an annual fee that you’ll have to pay each year you have the account. However, there are a few cards that offer low interest rates and IDR0 annual fees as well as some that waive the annual fee in the first year.
Typically, low interest credit cards or low fee credit cards are a good option for students to consider.
Yes, a range of low interest rate cards also offer balance transfers. With these cards, you can get a promotional low or 0% balance transfer rate during the introductory period when you move debt from an existing card with a different issuer onto the new card.
At the end of the introductory period, a standard rate will apply for any debt remaining from the balance transfer. While some low interest rate cards will apply the low, ongoing purchase rate to your remaining balance transfer debt, others will apply the higher, cash advance rate. Make sure you check the revert rate for each low interest rate card you compare, so you can find one that’s affordable for you.
Sally McMullen is Finder's credit cards and frequent flyer editor by day and a music maven by night. She's also one half of the Pocket Money podcast. Her byline can be spotted on Yahoo Finance, Dynamic Business, Financy and Mamamia as well as Music Feeds and Rolling Stone. Sally has a first-class Honours degree in Communications and Media Studies (majoring in Journalism and Professional Writing) from the University of Wollongong.
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