[Disclosure: Cards from our partners are reviewed below.]
If you are someone who regularly carries a balance on your credit cards, you may want to look at some of our picks for the best low interest credit cards on the market (more on those later). Using a low interest credit card will help you pay less in interest fees each month that you don’t pay your statement in full. And while some credit card users will look for credit cards touting promotional financing rates that expire after a set period of time, others prefer to find a card with a low interest rate year-round. But before you look for the best 0% APR credit cards or the best low-interest credit cards out there, let’s try to understand more about what this all means first.
Understanding How APRs Work
If you are wondering what an APR is, it’s a good question and something that is important to know. An APR, or annual percentage rate, is the rate you’ll be charged interest based on what you owe on your loan (like a mortgage) or on the amount of debt you carry on a credit card.
Noting the word annual, you’ll see that this rate is based on a yearly amount. So, there is an annual percentage rate formula that can help you understand the amount you will be charged in interest on a daily basis. To find out what that is, you divide your APR by either 365 or 360, depending on what your bank uses. For example, if you have the average APR on your credit card, which is about 15%, and your bank uses the 365 rule, the daily interest rate would be 0.041%.
How to Find a Low Interest Credit Card
As you compare credit cards, you’ll see that issuers disclose the annual percentage rate they charge if you don’t pay your balance in full. In fact, there may be a range or multiple APRs disclosed, because your credit scores are a major factor in which interest rates you’re granted, as well as whether you get approved for the card or not. (You can view two of your credit scores for free on Credit.com to see where you stand.)
There are some other interest rates issuers will disclose as well. For example, the interest rates for balance transfers or cash advances. You should consider the interest rates that apply to these transactions as well if you’re planning to use these card features. Cash advance APRs tend to be higher than purchase APRs and there may not be a grace period, which you may receive with regular purchase APRs.
Most credit cards now offer a variable interest rate, which can change based on adjustments to the Prime Rate, which itself varies with the Federal Funds rate. And although the Prime Rate can change at any time, it has been low and stable since 2008, with just a single rise of 0.25% in December 2015.
Remember, it’s important to read the fine print of any credit card you’re considering to be sure it’s right for you. With that in mind, here are our picks for the best low interest credit cards, based on costs and benefits. (Note: the list provides an overview of each card’s major terms, conditions and fees. Consumers should refer to the card issuer’s site for a full pricing/offer details.)
Our Picks for the Best Low Interest Credit Cards
UNIFY Credit Union’s Variable-Rate Visa Credit Card
Why We Picked It: The most qualified applicants receive an unheard-of variable APR for purchases.
APRs: UNIFY Credit Union offers several variable-rate Visa credit cards with interest rates of 5.74% – 18%. The APR you receive is, of course, based on your creditworthiness and will vary with the market, based on the Prime Rate.
Fee Overview: A rate of 3% or $5, whichever is greater, applies to balance transfers and cash advances. There are no annual fees for any of these cards.
Features: You can choose from several different variable-rate cards including the Visa Classic, Visa Gold, Visa Platinum and Engage Rewards Visa Signature cards, and the benefits will vary based on the product you choose. The Engage Rewards Visa Signature card, for example, comes with numerous benefits including a warranty manager service, travel and emergency assistance, and even a rewards program.
Simmons Bank Platinum Card
Why We Picked It: It offers an extremely low standard rate to all applicants.
APRs: This card has a variable interest rate of 8.25% which applies to both new purchases and balance transfers, while a slightly higher rate of 12.25% will apply to cash advances and convenience checks.
Fee Overview: There is no annual fee and no balance transfer fee for this card.
Features: This card comes with benefits including a car rental loss/damage waiver, travel accident insurance and emergency cash and credit card replacement.
Why We Picked It: In addition to being an innovative credit card, the Barclaycard Ring Mastercard (which you can read a full review of here) also offers very low interest rates.
APRs: This card offers a variable APR of 13.99% which applies to new purchases, balance transfers, and cash advances.
Fee Overview: There are no annual fees, balance transfer fees or foreign transaction fees for this card.
Features: This is not just a credit card with low-interest rates — it also features an online community of cardholders who interact with Barclaycard’s community manager to oversee the features and policies of this card. Community members participate in forums that help decide the card’s terms and conditions as well as determine how to give back profits in the form of customer rewards or donations to charity.
Why We Picked It: The Citi Simplicity card offers the longest 0% APR period on the market — 21 months for purchases and balance transfers. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)
APRs: For almost two years, you’ll enjoy no interest charges on the balance you carry on your Citi Simplicity credit card (which you can read a full review of here). However, after that, the variable APR will be 14.49% to 24.49%, depending on your creditworthiness. This is the highest rate on our list, so it’s important to keep this in mind if you think you may continue to carry a balance after the promotional time expires.
Fee Overview: This card boasts no late fees, no penalty rate and no annual fee. There is, however, a balance transfer fee of either $5 or 3% of the amount of the transfer (whichever is greater).
Features: Not only will you cut back on fees and interest charges with this card, but you’ll get great purchase protection perks (like extensions on manufacturer’s warranties) and travel protection (like worldwide car rental insurance).
At publishing time, the Citi Simplicity and Barclaycard Ring cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment.
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.
Additional reporting by Brooke Niemeyer.