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- Best Low Interest Credit Cards
Elizabeth is a writer specializing in credit cards, debt repayment, and small business. Her work has also appeared on MSN Money, Yahoo! Finance, and Business Insider.
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If you're looking for a credit card, getting one with a low interest rate should be one of your top priorities. It's always ideal to pay off your balance in full each month, but sometimes it's not possible. Low interest credit cards can tide you over when you come up short. They can also serve as a back-up emergency fund, and even help you pay off debt quickly. Here are our top picks for the best low interest credit cards.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.A perennial interest-avoiding favorite with a long 0% intro APR for both purchases and balance transfers. Read Full Review
N/A
$0
Purchases: 0%, 18 months
Balance Transfers: 0%, 18 months
14.74% - 24.74% (Variable)
FICO score for free
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.If getting rid of credit card debt is on your to-do list, this card can help. With no late fees, no annual fee, and no penalty rate, this card is an unmatched pick that’s made even better with an incredible 21 month 0% intro APR offer on balance transfers. Read Full Review
N/A
$0
Purchases: 0%, 12 months
Balance Transfers: 0%, 21 months
14.74% - 24.74% (Variable)
No penalty APR
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.This card is unavailable on site and card details may be out of date -- One of the few remaining balance-transfer cards that include an intro $0 balance transfer fee. Add in the premium rewards and welcome bonus, and it's hard to ignore. Read Full Review
2x points at US supermarkets ($6,000 spending cap per year), 1x points on all else. Use your Card 20 or more times in a billing period to earn 20% more points
$0
Purchases: 0%, 15 months
Balance Transfers: 0%, 15 months for transfers made within 60 days
12.99%-23.99% Variable
10,000 points after spending $1,000 within three months
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Earn a combined 2% cash back on all purchases - 1% when you buy, and 1% when you pay the minimum each month. Add that to no annual fee and an 18 month 0% intro APR offer on balance transfers and this card is a winner. Read Full Review
2% cash back: 1% when you buy plus 1% as you pay
$0
Purchases: N/A
Balance Transfers: 0%, 18 months
13.99% – 23.99% (Variable)
FICO score for free
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Packed with a deep bench of perks that is rare in the cash-back category, including an easy-to-pocket bonus, long 0% intro APR offers, and bonus cash back. It's a leading pick no doubt. Read Full Review
5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate, 1% on all else
$0
Purchases: 0%, 15 months
Balance Transfers: 0%, 15 months
16.49% - 25.24% Variable
$200 after spending $500 within three months, free credit score monitoring
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.This no-annual-fee card has one of the longest 0% intro APRs on the market that applies to both purchases and qualifying balance transfers. This rare combination makes it a standout to avoid interest charges. Read Full Review
N/A
$0
Purchases: 0%, 18 billing cycles
Balance Transfers: 0%, 18 billing cycles for balance transfers made in the first 60 days
14.49%-24.49%
FICO score for free, no penalty APR
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Includes a market-leading bonus in the no-annual fee category and a flexible cash rewards program that enables you to earn premium cash back in a category of your choice. Plus, the long 0% intro APR offer makes this card a standout among its peers. Read Full Review
3% cash back on gas or in your choice category, 2% at grocery stores & wholesale clubs (up to $2,500 in combined bonus category quarterly purchases), 1% on all else.
$0
Purchases: 0%, 15 billing cycles
Balance Transfers: 0%, 15 billing cycles on transfers made within first 60 days
13.99%-23.99%
$200 after spending $1,000 in the first 90 days, 25% to 75% more rewards for Preferred Rewards members
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.A rare card that offers a long 0% intro APR for purchases. Even better, it packs in a robust rewards program, all with no annual fee. Read Full Review
5x rewards on up to $1,500 in combined purchases each quarter in popular categories such as dining, groceries, travel, and automotive
$0
Purchases: 0%, 12 months
Balance Transfers: N/A
14.40% - 24.40%, variable
$150 credit after spending $1,200 on purchases within the first 90 days
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.This may be the most versatile and flexible cash-back card on the market. The long 0% intro APR makes the offer hard to pass up, especially if you're wanting to keep a one-card wallet that packs in a rich rewards program. Read Full Review
Unlimited 1.5% cash back, no minimum to redeem
$0
Purchases: 0%, for 15 months
Balance Transfers: 0%, for 15 months
15.49% - 25.49% Variable
$150 after spending $500 within first three months of account opening, free credit monitoring
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.A clear standout card in its category with a long 0% intro APR for 18 months on both qualifying balance transfers and purchases, no annual fee, and a FICO® Score for free. Read Full Review
N/A
$0
Purchases: 0%, 18 months
Balance Transfers: 0%, 18 months on qualifying balance transfers
15.49%-24.99% (Variable)
FICO® score for free, mobile phone protection
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Whether you're looking to round out your wallet or open your first credit card, a low interest credit card is a must-have. If you ever need to carry a balance or use a credit card to cover an emergency, you don't want to be hit with astronomical interest fees. If you're paying down debt, look for a low interest credit cards that comes with a 0% intro APR offer, which could save you hundreds of dollars. Here's everything you need to know about choosing and using low interest credit cards.
Low interest credit cards, or low APR credit cards, are cards that charge a below-average annual percentage rate (APR) on purchases, either on a temporary or a permanent basis. The best low interest rate credit cards can save you a tremendous amount of money if you carry a credit card balance, and they can also help you pay down debt faster.
The interest rate you pay on any given credit card depends on a few factors, such as your credit history and overall debt profile. If you qualify for low interest credit cards, you'll be charged less interest than usual, making it more affordable to carry a balance. Some cards even offer 0% intro APRs for several months on both purchases and balances transferred from other cards. Generally speaking, this is the best way to save money on your credit card balances.
There are two main types of low interest rate credit cards:
It's important to understand how credit card APRs work so that you understand how much your credit card balance is costing you.
APR stands for "Annual Percentage Rate." It's the rate of interest applied to your balances. Most credit card companies use an average daily balance method for calculating interest. To arrive at the daily interest rate, they divide the card's APR by 365.
To illustrate the impact the best low interest credit cards can have, compare how making a payment of $100 per month on a $3,000 initial credit card balance would reduce your debt over six months in three different APR scenarios:
| Month | Balance with 18% APR | Balance with 12% APR | Balance with 0% APR |
|---|---|---|---|
| 0 | $3,000 | $3,000 | $3,000 |
| 1 | $2,945 | $2,930 | $2,900 |
| 2 | $2,889 | $2,859 | $2,800 |
| 3 | $2,833 | $2,788 | $2,700 |
| 4 | $2,775 | $2,716 | $2,600 |
| 5 | $2,657 | $2,569 | $2,500 |
| 6 | $2,597 | $2,495 | $2,400 |
Note: Figures rounded to the nearest dollar.
Here's the takeaway: After six months, the cardholder with a 0% APR would have reduced their debt by nearly $200 more than the cardholder with an 18% APR, even though they both made the same payments.
Low interest credit cards can come in handy if you utilize them correctly. Here are a few tips on how to best put them to use.
Keep one in your wallet to cover emergencies: Ideally, you should have enough cash in an emergency fund to cover at least six months of living expenses. But if you don't have anything in your savings account, or it's not enough to pay for an unexpected expense, you could use a low interest credit card as a kind of backup emergency fund. Unlike some other options, such as a personal loan, the funds on a credit card are immediately available. And the low interest rate should help keep your payments affordable.
Use it to finance a big purchase: Low interest credit cards can be a good way to buy big-ticket items you can't afford to pay for all at once. Look for a really low rate -- or, even better, a 0% intro APR on new purchases. You'll want to explore all of your options first though, as it's often wiser to wait until you've saved enough money to pay upfront. If you go with a 0% intro APR credit card, you could potentially finance the purchase without paying any interest at all. But it's crucial that you make sure you can pay off the balance before the introductory period ends.
Do a balance transfer to pay off debt more quickly: If you're trying to pay off debt with a high interest rate, you know firsthand how crippling those massive interest charges can be. Doing a balance transfer -- that is, transferring your existing debt to a credit card with a lower interest rate -- can significantly relieve that burden. It will ensure that more of your monthly payment goes toward chipping away at that balance rather than paying interest fees. You can even opt for a balance transfer credit card with a 0% intro APR on balance transfers, but you'll want to make sure you can pay off the balance before your introductory period ends. But be sure to research your options first: If you can qualify for a low interest personal loan and use that to pay off your debt, you might save even more money.
Here are some examples of when a low interest credit card can be useful:
While we'd never advise carrying a balance for long periods of time, a low interest credit card can be better than the alternatives. You would pay about $10 in interest every month on a $1,000 balance at a 12% APR. That's far better than paying a $35 overdraft fee or getting a loan shark rate from a payday loan store.
We think about credit cards and their APRs in two different ways. Some cards offer exceptionally low APRs for a certain period of time (0% intro APRs on purchases or balance transfers), while others offer persistently low APRs, generally for people who have excellent credit. These cards fit into two distinct categories because they are designed for very different purposes.
A zero interest credit card is generally the better way to go, especially if you can pay off your entire balance before the introductory period expires. Cards with permanently low interest rates are still an expensive way to borrow money, especially with the emergence of the personal loan industry over the past few years.
It can be difficult to find a credit card with a permanently low interest rate, and it's typically a better idea to obtain a personal loan if you need to finance a large purchase over an extended period of time. These have fixed rates that are often superior to even the lowest permanent credit card APRs and allow you to repay your debt over a few years.
It is sometimes possible to lower your credit card interest rate. If you've never missed a payment, or if you've diligently been paying off a balance for a while, your credit card issuer might be willing to reward you by decreasing your APR slightly. Give customer service a call and request a lower interest rate -- the worst that can happen is they'll say no. If that's the case, you can look into opening a low interest credit card instead.
Credit card interest can be a little tricky, but once you understand how it works, it’s actually pretty simple.
The first thing you should understand is that credit cards show interest rates on an annual basis, but most credit cards charge interest on a daily basis. So if a credit card has an 18% APR, that means it actually carries an interest rate of about 0.049315% per day (18% ÷ 365 days = 0.049315%).
If you have a $5,000 balance, the next day the balance would grow to $5,002.70 at an 18% APR, assuming that no other purchases or payments are made. This calculation is made every day during a billing cycle. After 30 days, the $5,000 starting balance would grow to about $5,074.50 at an 18% APR.
Given that most 0% APR credit cards don't come with annual fees, it's not necessary to close the card when the introductory period ends. In fact, closing it could lower your credit score. Your credit utilization ratio -- that is, your overall debt divided by your overall credit limit -- plays a large part in calculating your credit score. The lower it is, the better. By keeping your credit card open after the 0% intro APR ends, and also not running up a balance, you'll be keeping your debt-to-credit ratio low. However, the key is not to run up a balance. If you can't trust yourself to keep the card open without falling into debt, it's best to close the card and remove the temptation.
It makes sense to get a low interest credit card when you want a credit card on hand to use for everyday purchases or emergency expenses. The lower interest rate will help you save money if you ever need to carry a balance. Low interest credit cards can also make sense if you want to do a balance transfer to pay off debt. However, it's worth considering a balance transfer credit card with a 0% intro APR if you'll be able to pay off your balance within 15 or 18 months.
Elizabeth is a personal finance writer specializing in credit cards, debt repayment, and small business. Her work has appeared on The Motley Fool, MSN Money, Yahoo! Finance, and Business Insider. She’s an avid credit card points collector and perpetual traveler currently living in Costa Rica.
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