Low Interest Credit Cards

A good interest rate on a credit card is around 14%. That is roughly the average regular interest rate on credit cards for people with excellent credit. Even a relatively good interest rate on credit cards for people with lower scores is not all that low. For example, credit card users with good or fair credit could pay interest at an annual rate of 20%+ and still have a below-average APR. Better-than-average for a credit card overall isn’t much below 20%, either. That’s why the best interest rate on a credit card is 0%.

There are two ways to get the best possible credit card interest rate: 0%. For starters, lots of credit cards offer 0% APR periods as introductory perks for new customers. They can be a great help to people looking to finance a large purchase or transfer a debt to pay it off faster. But those intro periods are always temporary. Most (but not all) 0% APR credit cards require good credit or better, too.

The second way to avoid credit card interest altogether is to pay your full statement balance by the due date every billing period. Setting up automatic monthly bill payments from a bank account can be a big help with that. You can also try the Island Approach, which is a method of using multiple credit cards for different expenses. For example, you could use your lowest-rate card—maybe even a card with a 0% APR period—for things you’ll need to pay off over a period of time, and a rewards card for everyday purchases that you pay off every month. That way, you wouldn’t pay interest at all, no matter what rate you have on the rewards card.

There are also a number of things you can do to raise your credit score and, in turn, get a better shot at a good interest rate on your next credit card. Because if a low credit card APR is your objective, it truly pays to have an “excellent” credit score of 750 or higher.

When comparing credit cards with low or 0% interest rates, it’s important to know both your credit score and how much you can afford to pay toward your debt each month. This will make it a lot easier to tell which low interest credit cards might be available to you and then compare them based on how much each is likely to cost you by the time you pay off your balance. It’s hard to tell whether you should go after a really long 0% APR period, a really low regular APR, or a card that is decent in both categories just by eyeballing your options. But by plugging the relevant rates and fees into a credit card payoff calculator, along with your budgeted monthly payment, it will quickly become clear which low interest or 0% APR credit card is best for you.

With that being said, it’s also important to note that the credit cards with the best rates typically have at least a couple key things in common. For example, they hardly ever charge annual fees. In addition, they usually require at least good credit for approval. Keep reading below to learn more about how to compare offers and get the best possible deal on credit card interest rates.

Financing a big purchase with a 0% APR card

If you’re financing a large purchase, a longer 0% interest period means lower monthly payments, which may help your monthly budget. But sometimes the longest 0% APR period is followed by a high regular APR, especially if you have less-than-perfect credit.

So if you plan on carrying a balance past the zero-interest period (or you think that might be a possibility), make sure to factor in each card’s regular APR when you’re comparing offers.

Transferring a balance to a 0% APR card

Those hoping to transfer an existing balance to a new credit card shouldn’t simply find the card with the longest 0% interest period on balance transfers. You’ll also want to consider the balance transfer fee, which is usually between 3% and 5%. It can end up being a significant expense, and it’s commonly overlooked.

That said, there are cards with both 0% APR on balance transfers and $0 balance transfer fees from time to time. They would be ideal for someone looking to transfer a balance, but such cards are only available to people with good credit or better.

A note about store cards and deferred interest

If you’re considering a store card, or a card from a specific retailer, make sure the 0% APR period is not, in fact, a deferred interest period. Deferred interest isn’t a true 0% interest offer—rather, the interest will accrue from the purchase date and will apply if you slip up. If you make a late payment, or have any portion of the balance remaining on the card at the end of the deferred interest period, you’ll pay every cent of interest that you would’ve paid from the start.

So beware of store cards, and read the fine print. Most of the time, you’re better off getting a regular credit card with a true 0% interest period.

No-interest credit cards won’t hurt your credit score more than any other credit card would. Opening any credit card will cause a small credit score hit due to the hard inquiry required by credit card companies when evaluating an application. A no-interest card won’t hurt your credit simply by existing on your credit report, though. After the minor initial drop from the hard inquiry, a new credit card generally will boost your credit score by increasing your total credit and lowering your overall credit utilization. That’s assuming you use it responsibly.

Zero APR credit cards could bring down a credit score if they’re misused. A no-interest period makes it easier to rack up a bigger bill than you’d planned on or can manage. No interest means there’s less pressure to pay off your balance in full every month, too. If your no-interest period turns into a high regular APR when you’re carrying a large balance, it could quickly become unaffordable. And if you’re unable to make the minimum payments, your credit score will definitely take a hit.

Simply carrying a balance on a credit card shouldn’t hurt your credit score, as long as you don’t miss due dates. But a long period of high credit utilization can do some damage. Many people seek out a 0% APR credit card specifically to pay off a large purchase over time without paying interest. That’s a good use of a no-interest period. But if the purchase takes up a big chunk of the new credit limit, the cardholder’s credit utilization will go up. That’s especially true if the cardholder doesn’t have more than one credit card or has limited credit history. This can bring down a credit score, though it’s hard to say exactly how much, because a variety of factors are in play.

It is worth noting, however, that if you won’t need your credit score for anything important for a while, temporarily high credit utilization is better than paying a lot in interest. Also, don’t worry about negative remarks on your credit report just because you aren’t paying interest—there’s no truth to that claim.

Ultimately, if you’re considering getting a new credit card for its 0% APR period, the best things you can do to minimize the chances of hurting your credit are to always make payments on time and avoid maxing out your credit limit. Also, it’s not a bad idea to set spending boundaries beforehand to avoid paying the regular interest rate after the promotional period expires.

Hi! Yes! It is definitely worth calling and asking them. You may need to make more than one call until you get a person who has the authority to make that change, but it can't hurt to call and ask. I'd do a bit of research first to see what the interest ranges are that the credit card company operates in so that you know where you might fall. You could also send an email or letter to ask.

You also might want to see if there is a format or form provided online by your credit card company to request a lowered interest rate – that site will provide specific information to help you succeed in your request. 

I feel as if it never hurts to ask for discounts and good deals. Many of us shy about doing this - I often am - but if you can get your courage up and try, you may be successful. Good luck to you!

Credit card companies generally make money off of fees and interest. So it’s understandably confusing that they would sacrifice the interest part of the equation, if only for a limited time, especially since most 0% cards don’t charge annual fees. But there are three main reasons why banks and credit unions offer 0% APR credit cards:

1. To entice new customers. Zero percent intro rates are eye-catching, and banks can market their other products to new cardholders in order to make money.
2. To encourage more spending. Credit card companies make money from so-called interchange fees every time you make a purchase. And the more debt you rack up, the less likely you are to repay your full balance within the 0% term.
3. To make money from interest. This might seem a bit counterintuitive, but issuers know that many people will carry a balance for longer than their 0% intro rate is available. And that’s when they hit you with a high regular APR. The current average is 17.86%. In other words, credit cards with no interest whatsoever don’t actually exist.

These reasons also help to explain why credit cards don’t have permanent 0% rates. And the fact that issuers offer 0% APRs to make money, not just out of the goodness of their hearts, is why you should always be on the lookout for hidden costs and deals that seem too good to be true.

“If consumers actually routinely borrowed at 0% without paying any fees or interest, it would be difficult for credit card companies to earn a profit on these deals,” said Michael Simkovic, an associate professor at the Seton Hall University School of Law who studies the credit regulations. “Customers just really have to read the fine print, compare the total cost of borrowing the amount they need for the time they need it (including interest and fees) and be very, very careful.”

The minimum payment on a 0% APR credit card is usually 1 percent of the total balance. Of the top 10 major credit card issuers, only Discover charges 2 percent of the total balance. Once an introductory 0% APR period ends, the minimum payment will increase to include any interest charges added to the total balance since the last statement date.

How much you owe can also determine your minimum payment on a 0% APR credit card. The 1% or 2% rate usually applies if you have a sizeable balance, generally $1,000 or more. If your balance is less than the $1,000, you’ll pay a fixed floor rate, usually around $25 for minimum payments. The fixed rate varies by card. If you have a very small balance, less than $25, for example, your minimum payment will be the full balance.

There are other factors that can affect the minimum payment on a 0% APR credit card. If you pay late or exceed your credit limit, for example, your minimum payment will be adjusted. It will include any unpaid minimum payment, amount over the credit limit and related fees. If these occur during the 0% APR period, an issuer may also cancel the 0% interest rate and begin charging the regular APR.

Here is what you should know about the minimum payment on 0% APR credit card:

• A minimum credit card payment is the lowest amount you’re obligated to pay each billing cycle in order to keep your account current.
• Most major credit card issuers require a minimum payment equal to 1% of the total balance. Discover charges 2%.
• When a 0% APR period expires, minimum payments will increase to include any interest charges added to the total balance since your last billing cycle.
• You can find your minimum payment on your credit card statement. It is also available on your online account or in the introductory pamphlet included with your new card. You can also call customer service at the number on the back of your card to inquire.
• Minimum payments can be determined by how much you owe. The 1% - 2% rate usually applies to higher balances ($1,000 and more). A minimum payment floor (usually around $25) often applies to balances less than $1,000.
• Usually, if you have a balance of less than $25, the full balance is the minimum payment.
• An issuer may also cancel the 0% interest rate and begin charging the regular APR if you pay late, exceed your credit limit or fail to make the minimum payment. Your minimum payment will be adjusted to include any outstanding minimum payment, over limit amounts or any related fees.

Don’t assume that a 0% APR means you don’t have to pay anything at all. You are required to pay the minimum every month; you just won’t owe interest during the 0% period. And you should always try to pay significantly more than the minimum amount due on a 0% APR credit card. You want to pay off the entire debt before the introductory rate expires and the regular APR kicks in. Any missed payments or payments less than the minimum amount will likely lead to the 0% APR being cancelled.

If you’re transferring a balance or financing a big purchase, divide the balance by the number of months the 0% promotion lasts. This will help you get a rough estimate of how much you should pay each month. Better still, divide the balance by one less month than you have on your promotion to make absolutely sure no balance remains at the end.

It might make sense to get a credit card with a high interest rate, rather than a low one, if you plan to pay your bill in full every month. If that’s the case, you shouldn’t care whether your card’s interest rate is high or low because you won’t carry a balance for it to apply to.

So if the card with the best combination of rewards, fees and benefits for your needs happens to have a high APR, that shouldn’t change anything if there’s no chance you’ll be assessed interest charges anyway. And that’s important because most of the best rewards credit cards have pretty high regular APRs.

But you shouldn’t go seek out a high-interest credit card, either. All else being equal, go with the lower APR.

Fixed low interest rate credit cards are basically extinct. And there’s a fairly simple reason for that. Credit card companies lost the ability to change interest rates whenever they want when the CARD Act took effect in February 2010. In fact, they can only raise rates on existing consumer-card balances when the accountholder becomes 60+ days delinquent. The law does not cover small business credit cards.

As a result, credit card companies now use variable interest rates, which change based on a benchmark such as the Prime Rate, to make sure their offers keep pace with the broader economic climate.

Of course, introductory interest rates are an obvious exception to this rule, since they have a set expiration date.

The best secured credit card with a low APR is the primor Secured Visa Gold Card or the First Progress Platinum Mastercard, both of which charge 9.99% (fixed for Primor and variable for First Progress). USAA secured cards also are good options if your credit is on the higher end of the bad range and you qualify for the 11.5% (V) APR. But to get a USAA card, either you or a close family member must have served in the U.S. military.

It’s also worth pointing out that carrying a balance on a secured card doesn’t make much sense. On the one hand, you can’t buy anything that you wouldn’t be able to afford without the secured card, since your spending limit is equal to the amount of your deposit. In theory, you could just pay in cash and avoid having to pay interest to the credit card company. On the other hand, you may need a secured card to rebuild damaged credit. So carrying a balance from month to month with a secured card isn’t the best idea, but you shouldn’t throw the baby out with the bath water. There are plenty of cards to help you keep costs down. 

Here are the best secured credit cards with a low APR:

• USAA Secured Card Visa Platinum Card: The APR will be between 11.15% (V) and 21.15% (V), depending on your creditworthiness. The annual fee is $35. The minimum deposit is $250. There are no rewards. 
• USAA Secured Card American Express Card: The APR is between 11.15% (V) and 21.15% (V), depending on creditworthiness. The annual fee is $35. The annual fee is $250. This card does not offer rewards. 
• Navy Federal Credit Union nRewards Secured Credit Card: The APR will be between 10.24% (V) and 18% (V), depending on your creditworthiness. There is no annual fee. The minimum deposit is $500. This card offers rewards.
• OpenSky Secured Visa Credit Card: The APR is 18.64% (V). The annual fee is $35. The minimum deposit is $200. This card does not offer rewards.
• primor Secured Visa Gold Card:The APR is 9.99%. The annual fee is $49. The minimum deposit is $200. This card does not offer rewards.
• primor Secured Visa Classic Card: The APR is 13.99%. The annual fee is $39. The minimum deposit is $200. There are no rewards.
• First Progress Platinum Prestige Mastercard Secured Credit Card: The APR is 9.99% (V) The annual fee is $44. The minimum deposit is $200. This card does not offer rewards.

A secured credit card with a low APR isn’t the best option for financing. You’ll need an unsecured card for bad credit if you actually need to borrow money. But a secured card with a low APR is better than one with a high APR if you don’t need to borrow but may wind up carrying a balance from month to month because of temporary cash flow issues. 

The best low interest credit card for debt consolidation is Chase Slate because it has a 0% intro APR for 15 months, a $0 balance transfer fee and a $0 annual fee. That gives you a great deal of time to transfer all of your debt and pay it down with no interest. Chase Slate has a starting limit of $500, but it could be higher depending on your credit standing. Chase does not allow Slate cardholders to transfer more than $15,000 in credit card debt within a 30-day period.

Balance transfer amounts can’t be greater than the card’s credit limit. Some issuers will limit that even further, to only 75% of your available credit limit. You also might not get approved for the full balance transfer limit you’re requesting.

When it comes to consolidating your debt with a balance transfer card, you want to be sure you can pay off the combined balance before the 0% APR period ends. If you still have a balance remaining at that time, it will be subject to high interest rates that could send you right back to the debt situation you started in. The regular APR for the Chase Slate card is 16.49% - 25.24% (V). In addition to interest, the $0 balance transfer fee is only good for transfers made in the first 60 days. After that, transfers will be subject to a 5% fee (minimum $5).