Approval for any credit card will depend on your status. The APR shown represents the interest rate offered to most successful applicants. Depending on your personal circumstances the APR you're offered may be higher, or you may not be offered credit at all. Fees and rates are subject to change without notice. It's always wise to check the terms of any deal before you borrow.
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What's in this guide?
- What is a low rate credit card?
- More about low interest rate credit cards
- How much money could I save with a low rate credit card?
- How to compare low interest rate credit cards
- How to get a low interest rate credit card
- Pros and cons of low rate credit cards
- Bottom line
- Frequently asked questions about low interest rate credit cards
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 other credit cards. If you don’t pay your card off in full each month, a low rate card could help to keep your interest charges to a minimum. Switching to a card with a lower interest rate can also help you pay off your debt faster. Use this guide to learn about how low interest rate cards work and compare the features and offers available to find the right low rate card for your needs.
Before diving in, it’s worth noting that there are plenty of 0% deals available on the market – on balance transfers or forthcoming purchases, or even both. Those cards offer a rate of 0% for a set period, after which a much less competitive “revert rate” kicks in. So if you’re after a credit card to spread the cost of an upcoming expenditure or to help you clear existing card debt – rather than for longer-term ongoing use, a 0% deal will usually work out cheapest (and when it’s served its purpose you can just cancel it). Use the links below to compare these types of card, or carry on to compare cards with low ongoing rates using the table above.
More about low interest rate credit cards
Low interest rate cards offer a much lower interest rate for purchases than standard credit cards. While credit cards in the UK typically have interest rates that range from 12% to 30% per annum, low rate cards offer standard variable rates as low as around 6% p.a.
This low rate will usually be “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).
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 some other cards.
If you do always clear your balance in full each month, then the card’s interest rate doesn’t actually matter. That’s because you’ll almost always avoid paying any interest at all thanks to the grace period that almost all cards offer.
How much money could I save with a low rate credit card?
That’ll depend on how you use your card. Even a small difference in credit card interest rates can save you a lot of money.
Let’s say you spend £2,000 on your credit card and take six months to pay it off. If you had a low rate card that charged 6% p.a., you’d pay around £35 in interest while clearing your balance. But with an interest rate of 20% p.a. you’d pay close to £120 in interest over the same time period. In that example, a low rate card could save you around £95, but the bigger your expenditure, or the longer you take to repay it, the bigger the saving gets.
However, if you already have a large existing credit card debt and want to pay it off as quickly and cheaply as possible, you should consider a 0% balance transfer card instead. Similarly, if don’t have existing card debt but you always pay your balance in full, then a card with benefits such as reward points or cashback might have more to offer you.
What is APR?Credit card promotions must include a representative APR (annual percentage rate), which all card issuers must calculate in the same way. It’s designed to help consumers to compare the yearly cost of borrowing across multiple cards.
The APR takes into account a card’s default interest rate (not any promotional introductory rate) on purchases, plus any mandatory fees. If the card you’re looking at doesn’t come with an annual/monthly account fee, then chances are the purchase rate and the APR will be the same figure.
There’s a BIG catch, however. The Financial Conduct Authority (FCA) states that this rate must be what 51% (or more) of people accepted for a card receive. The other 49% could be offered a higher rate (and for the best deals out there, chances are they will be). That’s why it’s often called the “typical” or “representative” APR. That’s especially important with low interest rate credit cards because they usually require a pretty good credit score. If yours is less than perfect, you’ll likely be offered a higher rate and not the one advertised.
It’s also important to remember that although it can help, the representative APR isn’t everything. If you pay off your balance in full each month, you’ll usually avoid paying interest altogether.
How to compare low interest rate credit cards
With a wide range of low rate credit cards on offer in the UK, comparing your options will help you find one that suits your needs. Here are the key factors you should consider:
If you’ve got your heart set on a low-rate card, here are some of the big questions to ask:
How to get a low interest rate credit card
After you’ve compared your options, applying for a low interest rate credit card is easy. Click the “Go to site” button from the table above and you will be taken to the bank’s secure application page. From there you’ll be asked to provide details about yourself, your employment, your financial situation and must prove your identity. In order to prove your identity you will usually need your driver’s licence or passport. Applications take about 15 minutes and most provide a response within 60 seconds.
Pros and cons of low rate credit cards
- You’ll pay less interest on purchases, making it easier to manage your credit card debt.
- Many low rate cards also have low, if not zero, annual fees.
- Many low rate cards do not have introductory offer rates – meaning that their rates will stay low indefinitely and there’s no need to set yourself a calendar reminder to switch when the rate expires.
- You can often combine low rate cards with other features such as balance transfers or zero foreign transaction fees.
- You’re less likely to receive reward points and other perks.
- You may not qualify if you have a poor credit history.
- That low rate is usually a variable one – so while it’s likely to stay low, nothing’s guaranteed.
If you often carry a balance, a low interest credit card could help you save on additional fees and 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.
Frequently asked questions about low interest rate credit cards
What is the best low-interest credit card?
What does “low rate” refer to, and when does it apply?
How is credit card interest calculated?
Is a low rate card the cheapest credit card option?
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