Low-Interest Credit Cards

While credit cards can be an excellent tool for many consumers, they can also be dangerous if used improperly.

The ability to purchase whatever you want with money that you can pay back over time is certainly attractive to many individuals, but if you spend too much on credit, interest rates can make your debt grow considerably.

This is why savvy consumers should try to look for a low-interest credit card. While they can still be abused, low-interest credit cards offer exactly what their name implies: in low interest rates. Therefore, utilizing one of these cards can allow you to begin paying off your debt without the risks of that debt growing faster than you can pay it.

What are low-interest credit cards?

To understand how a credit card can have low-interest, we must first discuss how interest works.

When you use a credit card, you are creating a balance that represents the amount of money that you have borrowed from your credit lender. Each month that you have a credit debt balance, a certain amount is added to it that represents interest that you must pay to continue using your credit card. This amount will vary, depending on:

  • The card company that you choose.
  • Your specific interest rate.
  • How much debt you currently hold with your credit card.

While some credit cards have annual fees associated with them to use the card’s services and some do not, every card has an interest rate in the form of an annual percentage rate (APR). This is the percentage in interest on credit that you are responsible for paying, which can range anywhere from under 10 percent to over 20 percent of your current balance. The APR that your card has is highly dependent on the type of card and what kind of other benefits it can give you.

Cards with extra benefits like cash back often have higher APRs as well and vice versa. Therefore, you should choose whichever type of card works best with your payment style.

The best way to avoid paying interest on a credit card is to pay off your credit balance whenever you use your card. However, paying off your credit balance in full is often difficult to do, especially if you already have a moderate to high amount of credit card debt. This is where low-interest credit cards can help.

Most Notable Benefits of Low-Interest Credit Cards

Low-interest credit cards have a number of excellent benefits for those individuals who care about how much they might need to pay every month. Some of these include:

  • Their low interest rates. Lower interest rates mean lower additional costs beyond what you have already used your credit card to pay for. While the national average APR among all credit cards in 2018 was almost 17 percent, low-interest credit cards can have APRs that dip down to an average of 13 percent and can even go lower than 10 percent if your credit score is high enough and you choose the right company.
  • Their long promotional periods. No matter what kind of credit card you sign up for, they will all have some kind of promotional period at the beginning of your contract, which usually involve “0 percent APR” benefits. This means that for as long as the promotional period lasts, you will have an APR of 0 percent and will not have to pay any interest on purchases that you make with your new card. Low-interest cards can have other fees, but they often have some of the longest promotional periods.
  • Their ability to make it easier to hold a credit balance. Paying off your credit card all at one time is often ideal, but it can be impractical. If you need to hold a debt balance, it is best to make sure that you can afford to pay your interest payments after your promotional APR period ends. Some credit cards try to lure people in with attractive bonuses and promotions, but then impose high interest rates. Low-interest cards do not try to penalize you for having a balance, as long as you make your regularly scheduled payments.

Who should get a low-interest credit card?

Getting a low-interest credit card is not for everyone. If you are looking to pay off the entirety of your credit card loan immediately after making purchases to avoid paying any interest, it will not matter what your APR is.

You should get a low-interest credit card if you are willing to pay interest via your APR each month, or if you are wanting to pay off credit debt that you already have. You can often perform a balance transfer from one credit card to another in order to get better interest rates or bonuses. Thus, if you aim to pay off the majority of your existing debt at one time, utilizing a longer 0 percent APR period with a low-interest credit card is the best way to do so without needing to worry too much about paying interest.

How to Get a Low-Interest Credit Card

If one of these descriptions fits you, applying for a low-interest credit card may be a great option to meet your credit needs. Getting a low-interest credit card can be simple, as long as you know where to look. Any credit card provider or credit union can provide a wide variety of different cards with different rates and bonuses.

If you are committed to having a debt balance on your credit card but paying smaller amounts than others each month, then you should ask the card provider of your choice for its lowest APR options. Make sure you pay attention to how much the APR will increase after the initial promotional period.

Different cards will require different credit scores, or proof that you will be a reliable borrower. It can be easy to get swayed by fancy cash back plans or attractive signing bonuses. While these perks are great if you can get them, it is crucial to remember that your cheapest credit options will come from cards with consistently low APRs.

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