Low interest credit cards

Are low interest credit cards right for you? If you're shopping for a low interest credit card, you should start by identifying how you use your credit now and how you want to use it in the future. If you pay off your balance in full each month, you may not need to search for the best low interest rate credit cards, since you don't pay any interest on your charges. If you do carry a balance, though, you should compare low interest credit card offers to find a card with a low rate.

Who can benefit most from low interest credit cards?

You'll find a low interest credit card most advantageous if you carry a balance on your card and if you are paying off credit card debt. Here's why: paying a lower interest rate credit card means you are paying less each month on the balance. If you know you are likely to carry a balance on future purchases, a low rate credit card will reduce the overall cost of everything you buy. If you are working to reduce your credit card debt, switching to a low interest card means that more of each payment goes toward eliminating the balance than to interest payments. Try a calculator to see the impact of a lower interest rate.

What should I look for in a low interest rate credit card offer?

There are several important facts to check when you decide you are ready to apply for a low interest credit card. First, check the interest rate, then check to see how long that rate will last. Some companies offer a short-term introductory rate followed by a rate that is higher than your current card. Unless you can pay the balance in full before the introductory rate ends, that offer won't be valuable. Consumers should also compare annual fees to make sure they are in line with other credit card offers.

How can I compare the best low rate cards for a balance transfer?

Some credit card companies offer credit cards with continuously low interest rates, say 10 or 11 percent APR. They also offer credit cards with a low introductory rate, sometimes as low as zero percent, to encourage you to transfer balances or make several purchases immediately. Compare these credit card offers based on your goals.

1.      Compare the promotional interest rate and see how long it lasts.

2.      If the interest rate will go up, check what the rate will be after the introductory period.

3.      Compare any balance transfer fees if you are considering transferring your debt from one card to another. Balance transfer fees are often as much as 3 percent to 5 percent of the total amount you owe, so make sure the fee you pay does not exceed the amount of money you will save in interest.

4.      Compare the annual fee.

You may want to use a credit card payoff calculator to estimate whether you can pay off your balance before any introductory period ends. Be sure to include the cost of any balance transfer fee in the total amount you will need to pay off.

If you intend to make a major purchase and pay if off over a long period of time, it may make more sense to apply for a credit card with a continuing low interest rate rather than a short-term low APR.

If you have decided a low APR credit card will meet your needs best, check out the low interest credit card offers on this page to see which one might be the best choice for you.

Are there any drawbacks to a low interest credit card?

A low interest credit card usually requires good credit, so consumers with fair to poor credit may not qualify for a lower interest rate. If you aren't sure where your credit stands, check your credit score before applying for a new credit card.

A low interest credit card is less valuable to you if you always pay your credit card bill in full, because you don't pay any interest at all if you pay your bill before the due date. If that's the case, you may be better off looking for a credit card that offers rewards points that you can use for things like airline frequent flier miles, hotel rooms, gas rebates or cash back. You can also look for a credit card with no annual fee or a fee that is waived during the first year.