Best Credit Cards with Low Interest Rates

Written By Jeff Hindenach
Last updated February 2, 2021

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August 12, 2017

Simple. Thrifty. Living.


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Reader Question: I’m looking for a credit card with a low APR, which one is the best?

Answer: It depends on what you are looking for. Revolving credit can dramatically increase your spending power, give you access to a variety of rewards and help you make large purchases when you need them. However, that expanded spending power can also come with a dramatically increased cost when interest rates are high. If you don’t pay your bill in full every month, you’ll definitely want to find the lowest possible interest rates for your financing.

Personal loans, particularly loans used to finance purchases like cars or homes, often come with very low interest rates. You can see rates below three percent for some of them. With credit cards, the interest is higher. The maximum rate for a credit card is 29.99 percent, but that is usually only charged as a penalty rate. For standard interest rates, expect to see around 20 percent. For low-interest rates, you are looking for a standard rate between 13 and 15 percent. Of course, many companies offer very low introductory rates, so be sure to look at the long-term rates, not just the special offer.

When you first open a credit card account, your rate is often directly linked to your financial history. If your credit score only barely qualifies you for the card, you might pay more than someone with a higher credit score. Just remember, your score is not a static number. As you use your credit card and make on-time payments, your score will improve. As your financial history improves, you might be in the right position to negotiate those lower rates. Here are a few strategies you can try:

  • Call and ask. Before you start applying for different cards or contacting new credit card companies, you might want to pull out your oldest card and give the issuer a call. A history of good payments and an improved credit score could definitely lead to a lower interest rate offer.
  • Collect several offers and negotiate. If you existing accounts aren’t willing to offer you a lower interest rate, you might want to start comparison shopping. If you can get approved for a card that comes with a lower interest rate, you have additional leverage when negotiating with your current account issuers.
  • Be prepared to transfer balances. If your existing credit card company is unwilling to match a new low-interest rate, you can always transfer your balances to get out from under the high interest.

The interest rate on your credit cards determines the total cost of each dollar you spend. Think of it as a fee charged on top of your purchases. Unless you pay your balance in full, every month, every dollar you charge comes with an annual fee that can be up to 29.99 percent. A lower interest rate means that instead of paying $0.30 on every dollar you spend, you can cut that in half. When you are making regular installment payments, cutting your interest in half can save you a lot over the course of a year.

Lower interest is not the only possible perk to using a low-interest credit card. You can also get a lot of the rewards available to standard rewards cards, simply with a lower interest rate. If you have an existing higher rate card, negotiating the rate down will not affect your other benefits. That means if you earn travel rewards or cash back, you can still enjoy those benefits. For advertised low-interest cards, you might avoid an annual fee, but that may also affect the perks offered with your card.

When you don’t pay the interest because you pay your total balance each month, the interest rate may not mean much. But, does that mean you can get better rewards and benefits by agreeing to a higher interest rate? Maybe, but be sure to check the fine print. You may find that there is an annual fee involved that will push the cost up for those benefits. Be sure to check before you make a decision. In some cases, the benefits provided are worth significantly more than the cost of the annual fee. For example, some credit cards offer to pay for your pre-boarding application, which can save you up to $300 per year.

Finding the best low interest credit cards often comes down to finding something with the absolute lowest interest. Often, business credit card accounts are available at the lowest rates, so if you operate a business, you might be able to negotiate a rate closer to the 13 percent. Even if you don’t have a business, you can still get close to the lowest rates, depending on your personal credit history.

Low interest rate credit cards help minimize the cost of expanding your buying power. When you see a great sale price or need to make an unexpected purchase, credit cards give you the flexibility you need. By choosing the lowest interest rate option, you help avoid paying more than you need to for any of your purchases.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of financial journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing on personal finance for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

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