Compare low APR credit cards for 2023

What is a low rate credit card?

A low rate credit card is designed to help you save money on purchases and existing card debt by charging less interest than most standard credit cards. It can be a good option if you often struggle to pay off your card balance in full each month while transferring existing balances to a card with a lower interest rate can also help you pay off your debt faster.

Before applying for a low rate credit card, keep in mind that plenty of credit cards on the market charge no interest at all for a set period on purchases and/or balance transfers. These are cheaper than borrowing with a low rate card, but you’ll need an excellent credit rating to get the best deals. Plus, if you don’t clear your balance before the 0% period ends, interest kicks in – at which point your borrowing can quickly become very expensive unless you transfer your debt to another 0% balance transfer card.

Low rate credit cards can be a good alternative if you’ve struggled to get accepted for a 0% credit card or if you’re worried you won’t pay off your balance in full before the 0% deal ends.

Use this guide to learn about low interest cards and their features and compare the latest offers.

How do low interest rate credit cards work?

Low interest rate cards work in the same way as other credit cards, but they offer a lower interest rate. According to data from Moneyfacts, the average purchase APR (which includes card fees) on credit cards has risen to an all-time high of 30.3% APR, with the average purchase rate also reaching a record high of 24.8% p.a.

In comparison, low rate cards offer standard variable rates as low as 8.9%.

Many low rate credit cards offer a low rate for the life of the debt. This means there’s no deadline by which you need to have repaid the amount borrowed before the interest rate jumps. However, this low rate is usually “variable” – meaning that the card issuer may decide to increase or decrease it at any point (for example, if the Bank of England’s base rate goes up or down). In some cases, the low rate might only be offered for a set time, say 3 years. After that point, the interest rate rises considerably.

A low rate credit card can make good sense if you regularly pay with plastic and know you won’t always pay off the balance in full each month. It gives you the flexibility to pay off your balance over time without the punishing high interest charges of other cards.

If you always clear your balance in full each month, then the card’s interest rate doesn’t matter. That’s because you’ll almost always avoid paying any interest thanks to the grace period that nearly all cards offer. In this case, you might be better off choosing a card with benefits such as reward points or cashback.

What providers offer low rate credit cards?

Several providers offer low rate cards, including a number of high street banks. Currently, some of these providers include:

• Tesco Bank: rates starting at 10.9%
• Lloyds Bank: rates starting at 10.9%
• Halifax: rates starting at 10.9%
• NatWest: rates starting at 12.9%
• The Co-operative Bank: rates starting at 8.9%

How much money could I save with a low rate credit card?

How much money you’ll save depends on how much you spend on your card, the interest rate available and how much you can afford to pay off each month.

Let’s say you spend £2,000 on your credit card and pay off £300 a month. If you had a low rate card that charged 8.9% p.a., you’d pay around £57 in interest, and it would take you around 7 months to pay off your balance.

By comparison, if your card had an interest rate of 20% p.a. you’d pay £126 in interest, and it would take you around 8 months to pay off your balance. In this example, you would save £69 by using a low interest card, and you’d clear your debt a month earlier.

In another example, let’s say you’ve spent £5,000 on your card, and you pay off £300 a month. With a low rate credit card charging 8.9% p.a., you’d pay £343 in interest, and it would take you 18 months to clear the debt.

On the other hand, if your card charged 20% p.a., you’d pay £818 in interest – so £475 more – and it would take you an extra 2 months to pay off the debt.

How to compare low interest credit cards

With a wide range of low rate cards on offer in the UK, comparing your options will help you find one that suits your needs. Here are the key questions you should consider:

• What is the purchase or balance transfer rate? Just how low is that low rate? Is it fixed or variable, and if it’s fixed, how long is it fixed for, and what does it revert to?
• What other rates and fees apply?The standard purchases rate might only apply to purchases you make in sterling using the card. Non-sterling transactions could have a different rate, and you might pay a fee per transaction, too. If you plan to use your credit card when you travel overseas or shop online with international retailers, a card that waives foreign transaction fees could save you more money. Cash advances (that’s withdrawing cash using the card) are usually charged at a higher interest rate, and there might be a fee to pay on top. You should also watch out for annual fees – although they’re rare in this type of card. Balance transfer fees don’t always apply on low rate cards either.
• Does the card offer any additional perks? Low APR credit cards don’t tend to offer a huge amount in the way of rewards, but it’s still worth checking. Some cards might enable you to earn loyalty points, for example. However, avoid spending more on your card than you can afford to repay just to benefit from reward points.
• Are you eligible? Each card issuer specifies minimum eligibility criteria, which might include being a UK resident and having a specified minimum income. Beyond that, it’s down to the issuer’s assessment of your unique circumstances. Almost all issuers now offer an eligibility checker facility so you can find out before applying how likely you are to get approved.

How to get a low interest rate credit card

Once you’ve compared your options and chosen the right card for you, start the application process. Click the “Go to site” button from the table above to take you to the bank’s secure application page. From there, you’ll be asked to provide details about yourself, your employment and your financial situation, and you must provide proof of identity. You will usually need your driver’s licence or passport to do this. Applications take about 15 minutes, and most respond within 60 seconds.

Can you get a low rate credit card with a poor credit score?

Low rate credit cards can be a good option if your credit score isn’t high enough to get accepted for a 0% credit card. However, you’ll still likely need a reasonably high credit score to get accepted for a low rate card. If your credit score is poor, you might only qualify for credit cards with high interest rates and low credit limits.

Credit builder credit cards, for example, are designed specifically for those with poor credit. If you use your card sensibly and pay off the balance in full each month, your credit rating should start to improve over time. You might then be able to apply for a more competitive credit card.

Typical eligibility criteria for a low rate credit card

To get accepted for a low rate credit card, you will typically need to:

• Be at least 18 years old
• Be a UK resident
• Have a good credit score

Some card providers might also stipulate a minimum income requirement.

Pros and cons of low rate credit cards

Bottom line

If you often carry a balance, a low interest credit card could save you money on interest payments and help you pay off your credit card debt faster. Just remember that you will still be paying interest, so it’s always best to pay off as much as you can each month to minimise the amount of interest you pay overall.

Common questions about low interest rate credit cards

What is the best low interest credit card?

There is no one “best” low rate credit card in the UK. With so many cards on the market, the best card for you depends on your particular circumstances and what features are on offer. Comparing low interest rate credit cards based on the features you’re looking for will help you find a card for your individual needs.

How has the Bank of England base rate affected low rate credit cards?

The recent rises in the Bank of England base rate mean that the cost of borrowing has become more expensive. Because interest rates on low rate credit cards are usually variable, banks have been able to increase their rates in response to the rising base rate.

What does “low rate” refer to, and when does it apply?

The “low rate” description typically refers to the purchase rate for that card, but it can also refer to the balance transfer rate. Depending on the card, the low rate might apply to both your spending and any balance transfers you carry out.

In some cases, the low rate might also apply to cash advances, including cash withdrawals, and money transfers that enable you to move money from your credit card into your bank account. However, this won’t always be the case, so check carefully.

How is credit card interest calculated?

Although the interest rate advertised is a yearly (per annum / p.a.) 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.

Is a low rate credit card the cheapest credit card option?

Not necessarily. If you qualify for a 0% credit card and can pay off your debt before the interest-free offer expires, this will be the cheapest credit card option. However, if you’re unable to pay off your balance before the 0% deal ends and interest kicks in, or if you simply don’t qualify for a 0% offer, a low rate credit card can be the next best thing. Just remember to check whether there are any additional fees you might not be aware of.

Other frequently asked questions

• Does the low interest rate apply to balance transfers?

  Yes, a number of low rate credit cards offer the same low rate on both purchases and balance transfers. However, in some cases, the rate for balance transfers might be higher, so be sure to check. What’s more, you often won’t have to pay a balance transfer fee with a low rate card.

• Do low interest rate credit cards come with interest-free days?

  Most low 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.

• How much do I need to pay off each month on my low rate card?

  You must pay at least the minimum amount as stated on your credit card bill each month. Depending on your credit card provider, your minimum monthly repayment is usually around 2%-3% of your total balance. However, because minimum repayments are so low, it’s best to pay off more than this if you can afford to – doing so could save you hundreds of pounds in interest and help you pay off your debt faster.

• Will I have to pay an annual fee on a low rate credit card?

  Because low rate credit cards don’t offer many additional perks or benefits, most do not charge an annual fee. When you’re comparing low rate cards, you can click on the “annual fee” column to compare them by this cost.

• Are low interest credit cards good for students?

  Low interest credit cards can be a good option for students to consider, but you’ll need a good credit rating to obtain a low interest card. Many students will not have had the opportunity to build up their credit history, and so they could find it difficult to get accepted. You can check out Finder’s specific guide to Student Credit Cards. for more information.