How do I save money with a low interest credit card?

You can save money with a low-interest credit card by paying less interest on a balance carried month-to-month or by transferring a balance from a high-interest card to a low-interest card. In certain situations, a 0% APR credit card is a better option than a low-interest credit card for saving money while paying down a debt.

Saving money while carrying a balance

Cardholders who tend to carry a balance from month to month will definitely save money on interest with a low-interest credit card. The average credit card interest rate is high - around 19% for new offers - so shopping around for a low-interest credit card will pay off for people who frequently carry a balance.

A 0% APR credit card can save a balance-carrier money, too. If you plan to get a no interest credit card, make sure you also have a plan to pay off any carried balances before the end of the intro period. Intro APR periods expire, often leading to a higher-than-average regular APR.

Saving money on a balance transfer

Saving money on a balance transfer can be tricky, but a low-interest credit card can certainly help. To save money in the end, a balance transfer must save you money on interest, and the balance transfer fee must be less than the amount you’re saving in interest. As long as the new card’s APR is lower than the current card’s APR - and the balance transfer fee doesn’t negate your interest savings - you will save money as you pay off the transfer.

If you know you can pay off the transferred balance in a year or so, you may benefit from a 0% APR balance transfer credit card. Some balance transfer cards have no balance transfer fee, which will make saving money even easier.

Tips for saving money with a low-interest credit card:

1. Using a credit card payoff calculator will tell you how much to pay every month to pay off your balance in a certain amount of time, both with your current interest rate and offers for lower APRs that might be available.
2. Keep in mind that the lowest interest credit cards require excellent credit and most 0% APR credit cards require at least good credit. If you’re not sure what your credit score looks like, check it for free on WalletHub.
3. If you already have a credit card, but you don’t like the interest rate, try giving the card issuer a call to ask for a lower rate. Your odds are better if you have a long and positive history with the issuer.

Just a heads up – when the economy goes south, lenders usually don’t want to give out low interest rates. So it gets harder to save money with a low interest card during a recession… and it looks like we’re headed into one.