Which credit cards have the cheapest interest rate?

Save money on purchases and transactions with a low-interest rate credit card

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Choosing a credit card with a lower interest rate can save you a considerable amount of money in the long-run. Compare and find a credit card with lower interest to save money today.

Comparison of low-rate credit cards

How do credit cards with a cheap interest rate work?

happy girl holding a credit card
Credit cards with low-interest rates work in the same way as a regular credit card. You make purchases using your card, receive a statement, and then pay part or all of the funds due.

These cards have a few standard characteristics, although because of an ever-evolving market these rules aren’t hard and fast:

  1. Lower annual fees
  2. No rewards programs
  3. A higher number of interest-free days
  4. They aren’t usually a platinum card.

Before you start looking at these types of cards ask yourself:

  • Do you regularly pay interest on your balance each month?
    Don’t merely go for the card with the lowest interest rate if you pay your card off in full each month. Cards with low or no-annual fees may be a better alternative in this circumstance.
  • Is a balance transfer more useful?
    Consider the balance-transfer period; how much you can transfer and if you can transfer from one particular lender to the other.

How to compare credit cards with a low-interest rate

Compare credit cards with low-interest rates by looking at the factors listed below:

  • Interest rate. The main reason you probably want a credit card with a low-interest rate is that you pay interest each month. Ensure the interest rate is reasonable.
  • The annual fee. In addition to the interest rate, the annual fee is an indicator of how much you’ll pay each year. You might benefit more from a card with no annual fees.
  • Current deals. Many credit cards offer low-purchase rate or balance-transfer rate deals as an incentive. These can be useful, depending on how you will use your card. If you’re getting a low-interest rate card to make a big purchase when you first get your card, a low or 0% purchase rate deal might be a good option.
  • Hidden charges. If you travel overseas often, using your card to make purchases in foreign currencies can incur transaction fees and ATM withdrawal fees. The provider may also charge fees for cash advances, late payments and more. If you’re likely to attract a number of these, you might want to find a card with lower foreign transaction fees.
  • Rewards programs. Some cards with low-purchase rates may come with a rewards program. These can add to the cost of the card, through higher annual fees, so calculate the value of the rewards you’re likely to receive in a year and ensure it is equal to or exceeds the yearly costs you will pay.
  • Interest-free days. Credit cards on the lower side of the interest-rate spectrum are no different to regular credit cards. Some cards come with no interest-free days, others with 55, and yet others will sit somewhere in between. How many days you need each statement period depends on you.

Pros and Cons of credit cards with the cheapest interest rates

Pros

  • You pay less in interest and annual fees
  • Most give you 55 days interest-free
  • Uncomplicated – it’s just you, your card and purchases

Cons

  • No rewards programs
  • No platinum benefits, eg concierge services, discounts or complimentary insurances

Things to avoid if you have a credit card with a cheap interest rate

As always, credit cards require discipline, and even if it has a low-interest rate this rule still applies. Here are some other things to avoid with this type of card:

  • Making unnecessary purchases. Unless you have a 0% interest deal on your card, any spending that incurs interest will cost you more than the original price. Interest, no matter how small, is something you want to avoid paying.
  • Paying for features you won’t use. While a rewards program may sound good, if you’re not going to use the card for regular purchases you may end up paying higher-annual fees for a feature of little benefit.
  • Take note of your payment pattern. Likewise, if you pay higher-annual costs for a card with 55 days interest-free, and you pay your balances off the next day, this feature may not be worth it.

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