The same thing applies here as with any other credit card category – not all low-interest cards are created equal. You need to keep your eye open when you are shopping for one of these cards as some of the features can make or break your budget.

Annual Percentage Rate. The Annual Percentage Rate, or APR, in low-interest cards is below 15%. It stands for the price you will have to pay for borrowing money. It’s a yearly rate you will be charged for carrying a balance. Every credit card company has a different APR. There are several different APR rates, including purchase, balance transfer, penalty, and cash advance APR.

Take a closer look at the Terms and Conditions of a credit card to see exactly how much are the different APR rates for the card you are considering applying for. Write down the APR rates for every card to make an informed decision.

Annual Fee. Low APR credit cards will also differ in terms of annual fees. If you are looking for a card that will help you save cash, you should always find out what’s the annual fee amount. Some of these cards have $0 annual fees, while others can come with annual fees as high as $100.

Introductory Annual Percentage Rate. Another important feature to look for is the introductory APR. Some credit card companies offer really attractive financial products with 0% intro rates. However, they may differ in terms of the zero introductory APR period. Usually, the 0% intro rates are valid for the first 15 to 20 months. Open the Terms and Conditions of a credit card to look for information about introductory APR. While you are at it, see whether it applies to purchases, balance transfers, or both.

Transfer Fee. Many people choose these cards so they can transfer debt from another lender. The transfer fee is a percentage of the total amount transferred. It typically ranges from 3% to 5%, and you should take it into account when you are card shopping.

Rewards Rates and Bonuses. A low interest card doesn’t typically offer additional perks such as cashback on purchases. However, the competition is harsh, and some card companies have introduced cashback rewards on their low-interest financial products. Rewards rates usually range from 1 to 2 points per $1 spent, and they are often capped at anywhere from 15,000 to 60,000 points.

If you plan on doing a balance transfer look for a low interest card with 0% intro APR with a grace period as long as possible. It will enable you to pay off your debt without paying any interest at all.

What Are the Advantages?

You are probably wondering what you stand to gain from using this type of card. Here are the most noteworthy benefits.

  • Low Annual Fee. Unlike some reward and low requirement cards, low interest cards come with a low annual fee. In fact, some of them come with no annual fee at all. Considering that some credit cards can come with a $150 annual fee, this is great news. You can use this money to pay off your debt and even reduce the interest fee.
  • Spend Less on Interest Payments. One of the biggest advantages of using these cards is, of course, a low interest rate. Monthly interest payments can significantly add to your debt if you don’t make your monthly payments on time. If you frequently carry your balance from month to month, you stand to save a lot.
  • Pay Off Your Loan More Efficiently. Interest rates are often completely neglected by consumers, at least until they start carrying a debt. Once the interest fees start piling up, consumers can easily end up with a huge debt breathing down their necks. These cards offer an easy way to get rid of your debt and once again gain control over your finances. They typically come with a 0% introductory APR and a low balance transfer fee. You can transfer your entire debt from another card, and pay it off entirely during the introductory period interest-free.

What Are the Disadvantages?

Pay attention to the following cons to know what awaits you should you decide to apply for one.

  • Limited to No Rewards. Rewards and additional perks are often found with cards in the rewards credit card category. Low interest cards usually don’t come with extra perks to help you earn money while spending it. There are some products on the market with limited rewards, but they are nothing compared to the perks offered by rewards cards.
  • Transfer Fee. The transfer fee is a downside that goes hand in hand with the perk of being able to transfer your debt and pay it during the 0% introductory period. In low interest cards, the transfer fee usually ranges from 3% to 5%. If your debt is significant, you will have to pay this fee to transfer it from your previous lender.
  • High-Interest Rate on Cache Advance. If you are looking to make cache advances with your low interest card, we have some bad news. It’s definitely not a type of card you should use for cache advances. The interest rates are simply too high for a cache balance to pay off.
  • You Can Easily Rack Up Your Debt. Owning a low-interest card can easily trick you into letting your guard down. You can easily start thinking that you can skip the next month’s payment and make it up with the next month. Low interest is still an interest, and the fees will add up to your debt nevertheless. Pay your monthly balances in time and use this perk only when you absolutely need to.

Should You Use Low Interest Cards

If you have racked up debt on a high-interest card, you should definitely consider transferring it onto a low interest card. These cards are quite useful in terms of saving money and getting your financial life back on track.

The Bottom Line

Low-interest credit cards are a viable option for anyone who wants to improve financial habits and pay off debts without adding up huge interest fees to their balance. The low to no annual fee, 0% introductory APR, and 15% or less regular APR make up for a solid credit card you can use to build credit, pay your debt, and plan your budget accordingly.

Frequently Asked Questions