Best Low Interest Credit Cards

If you can’t pay off your balance every month, you may be better off choosing a low-interest credit card. A low-interest credit card saves you money by reducing the cost of debt: When you're paying less in interest, you can pay back what you've borrowed more quickly. Some low interest credit cards come with a 0% introductory rate while others have a low, ongoing rate. However, remember that these cards generally require a good to excellent credit rating for approval.

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Best Low Interest Credit Cards (6)

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What is a low interest credit card?

Low interest credit cards offer a low rate of interest over a long (usually fixed) period of time. APR on low interest credit cards can be as low as 6.4%*.

Usually when credit cards offer a low or 0% interest rate this only lasts for a set promotional period. After that, the interest rate will go up to a standard rate. With low interest credit cards, the rate is usually set for the lifetime of the card.

What are the advantages of a low interest credit card?

The rate is set for the lifetime of the card, making budgeting more straightforward

You don’t have to keep switching cards to take advantage of various 0% deals, and can avoid paying balance transfer fees

Low interest cards tend to carry a significantly lower annual fee than regular cards – sometimes there’s no annual fee at all

If you usually pay off your bill in full every month, but think you might occasionally make a big purchase and need to carry over a balance, the level of interest you'll be charged will be relatively low

Is a low interest credit card right for you?

To qualify for a low interest credit card, you generally must have good to excellent credit.

A low interest credit card might be right for you if:

You have good or excellent credit scores

You often carry a balance on your credit card

You're looking to transfer a balance from a higher interest credit card

A low interest credit card might NOT be a fit for you if:

You have lower credit scores (you may not get approved)

You don't carry a balance and you want to earn rewards.

The current average variable interest rate on all credit cards (as of 9/12/18) is 17.32%.

A low interest card shaves several points off that rate and possibly even offers a 0% APR for a limited duration. For example, the Barclaycard Ring® Mastercard®, comes with a variable APR of 13.74%.

How to choose a low interest credit card?

Before shopping around for a low interest credit card, look up your credit scores and check your credit reports so you have a sense of where you stand. Most cards will tell you up front what type of credit is typically needed to qualify. If you don't fall in the required range, you shouldn't apply for such cards, because the hard inquiry on your credit report will bring down your credit scores slightly.

You should always compare interest rates on the cards you're considering, but be sure to also factor in other features, such as if there is an annual fee on the card. You might sacrifice a slightly lower interest rate for a card that doesn't charge an annual fee. (But do the math—if you're planning to carry a big balance, even a small difference in interest rate could outweigh what you'd pay in terms of the annual fee.)

If you're going for a balance transfer card, be sure to calculate the cost of the transfer fee when making your decision. And make sure you are clear on any introductory periods and how the rates will change after that intro period ends.

How to make the most of your low interest credit card?

If your card has a 0% intro period, strive to eliminate as much debt as possible before that introductory period ends and the interest resets to its ongoing rate. A 0% card should be a tool for getting rid of debt, not just a place to park debt and forget about it. If you find yourself moving debt from one 0% card to another but never paying it down, it's time to consider other debt solutions.

Although a card with a low ongoing rate can save you a lot of money over time, you're still paying interest. Apply those savings toward whittling down your debt faster. Saving, say, $20 a month on interest means you have $20 more you can use to reduce the balance on your credit card and move that much closer to freedom.

With any card, watch your balance. For the sake of your credit scores, it's best to keep your balance under 30% of the credit limit on the card. Under 10% is even better. When balances rise above 30% of credit limits, scoring formulas start to interpret that as a sign of financial stress.

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