Low interest credit cards hold advantages that should appeal to an array of cardholders, from first-time buyers to those already with balances. In addition, such cards typically offer a low APR, no balance transfer fee, and manageable rewards to earn. This being said, not all low interest credit cards are equally made and thus, comparison-shopping is always a wise first step.
For first-time cardholders, such as students, a low interest rate is preferable. A credit card can be key to building one’s credit rating, but only if it’s used responsibly. The basic advantage is that with a lower interest rate, any incurred finance charge will be less and thus, possible to pay off sooner. Of course, the best way to manage credit is to zero-out balances each month.
Such cards are also a good choice for cardholders with large balances. If transferred to a card with a lower interest rate, then the chances of the balance being paid off become more likely.
For example, if your balance of $5,000 is on a card with an interest rate of 20% and you commit to paying $100 each month, it will take 107 months to pay off the balance. In the end, you will have paid an astounding $10,700 to get out of debt. If however you could transfer this balance to a credit card with an interest rate of half that at 10%, then the same payment will see your debt paid back in 65 months. A “savings” of $4,200 over what you would’ve paid.
To recap, low interest credit cards are good for first-time cardholders, as well as those with large balances to transfer. They can also be a good choice for those looking to make a large purchase. Given that such a purchase won’t likely be paid off in the first few months, financing it over a year or more is what needs to be taken into consideration.
As with the above example, the lower the interest, the greater the impact your monthly payment will be. Some cards even give new cardholders a few months before any finance charges are applied. If there are no fees in the first six months, paying off a purchase will in the end, be similar to paying cash.
As for which low interest credit cards are the best? The answer will vary depending on the cardholder’s situation and need for the card. However, popular choices include:
- The Citi Platinum Select Card has no annual fee and 0% APR on balance transfers and purchases for up to 12 months.
- Not only is the Discover More Card a rewards card offering up to 20% Cashback Bonus when shopping online, but it also features 0% APR for 12 months on balance transfers and purchases.
- The Blue from American Express has a Llow APR, low balance transfer APR, and 5% cash back on purchases from supermarkets, gas stations, and drugstores; 1.5% on all other purchases; note: $6,500 tier before rates kick in.
For each of these low interest credit cards, you’ll notice that they’re all designed to give the cardholder a head start. The 0% APR is common to all, basically letting the cardholder make credit purchases at face-value for the first year, in which time any outstanding balance transferred over or taken on (via large purchase) can be brought down considerably.
Shop around. In addition to the highlighted offers above, there are dozens more to compare and contrast. From American Express, MasterCard, Visa, Citi, Discover, the list goes on. And so do your options. Consider them carefully and start saving.
