For credit card users who carry a balance from month to month, the interest rate is one of the most important numbers revealed in a card’s terms and conditions. So it only makes sense that finding the credit card with the lowest interest rate is the top priority for many consumers when they apply for a new card.
Credit card issuers used to advertise so-called fixed rates, which many cardholders realized were actually subject to change for nearly any reason. When the CARD Act of 2009 became law, credit card issuers were no longer able to market these rates as fixed unless they were truly unchangeable. Instead, nearly all card issuers began to offer cards with variable rates, which as before, were subject to change based on the U.S. prime rate. The prime rate is considered to be 3% plus the federal funds rate, which is set by the Federal Reserve Bank and has remained steady at 0.25% since November 2008.
Therefore, the prime rate has been 3.25% for nearly six years now, and credit card interest rates have remained fairly constant during that time. And while the Federal Reserve Bank could raise that rate at any time, affecting nearly all credit card holders, there are few economists and Fed watchers who are predicting such a move in the near-term.
How to Choose a Low-Interest Credit Card
Credit card applicants should always take the time to examine each card’s Schumer Box, which is the mandatory standardized disclosure of all of its rates and fees. There, they will find the standard purchase APR, and likely other rates for cash advances and balance transfers as well as a penalty APR that may apply when cardholders miss payments.
An important factor to consider when looking at this interest rate is to see if there is a single rate, multiple rates, or a range of rates offered to different cardholders, depending on their creditworthiness. If there are multiple rates, or a range of rates, those with less than perfect credit will not receive the lowest rate. If you’re not sure what your credit score is, it’s a good idea to check before you apply for a card to see whether you meet the issuer’s requirements. You can get your credit scores for free through Credit.com.
Beyond the APR, cardholders should look for anything that will make it easier to pay off their balances quickly (this calculator can show you how long it will take to pay off your credit card balances). This can include a promotional financing offer, reduced fees, or a well-designed website with automated notifications. In fact, those who already have a substantial balance already might consider first one of the best cards with a 0% APR balance transfer offer.
The Winner: First Command Platinum
Why it won: Of the hundreds of credit cards on the market, this one continues to offer the lowest standard interest rate that is not a limited-time offer.
The rates: This card offers a rate of prime plus 3%, which currently equates to an APR of 6.25% for purchases, cash advances and balance transfers. The penalty interest rate is 18%, and there are no annual fees, balance transfer fees or overlimit fees for this card.
The features: Upon approval, new cardholders will be granted a minimum credit line of $5,000. This card comes with a complete slate of Visa benefits including travel and emergency assistance, car rental collision damage waiver, warranty manager service, and emergency card replacement. In addition, this card offers points in the ScoreCard rewards program. While this program is hardly competitive compared to other rewards cards, it is remarkable that this ultra-low interest credit card offers any rewards at all.
1st Runner-Up: Simmons First VISA Platinum Credit Card
Why it won: This Arkansas bank’s card comes in just one percentage point behind our winner, and offers that great rate to all who are approved.
The rates: This card offers a low standard interest rate of 7.25% on purchases and balance transfers, and 11.25% for cash advances. There is no annual fee or balance transfer fee for this card, but there is a foreign transaction fee of 2% on all charges processed outside of the U.S.
The features: The Simmons First Visa Platinum offers standard features such as travel accident insurance, car rental collision damage waiver, and emergency cash and credit card replacement.
2nd Runner-Up: Iberia Visa Classic
Why it won: This Louisiana bank comes in closely behind the Simmons First card, but only because it offers multiple rates for less qualified applicants.
The rates: The standard purchase APR for this card is 7.25%, 10.25% or 13.25% based on the applicant’s creditworthiness. This card also offers an introductory balance transfer rate of 1.99% for six months, with a 2% balance transfer fee. There is no annual fee for this card, but there is a foreign transaction fee of 2% on all charges processed outside of the United States.
The features: This card comes with standard Visa benefits including an auto rental collision damage waiver and a roadside dispatch policy.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
At publishing time, the Simmons First VISA Platinum Credit Card is offered through Credit.com product pages, and Credit.com may be compensated if our users apply for and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment.