Credit cards offer convenient ways to make advance purchases to be paid on a later date. However, if your balance grows too big, the interest you pay on your card can significantly hurt your finances. There are various aspects to consider when choosing a credit card. Nevertheless, interest rates and annual APRs remain the most crucial part, especially if you plan to transfer balances to subsequent months.
Some credit cards charge shallow interests on the amount you borrow. Others even offer a zero-percent limited introductory rate. This means you do not have to pay any interest for a specified period, usually 12 -14 months. Unsurprisingly, APRs tend to shoot quite high following a long period of zero interest. There are also various other aspects to review when determining the best credit credit card for your unique needs. Here is a review of the top 10 low-interest credit cards in the US, including brief insights to help you understand your options.
Why should you consider low-interest credit cards?
I. Save you money on interest
As the name suggests, low-interest credit cards charge a very low annual APR compared to conventional credit cards. Most lenders also allow you to transfer bank balances at reasonably low rates. These offers are ideal if you have large balances or if your current card charges a high rate. Low-interest credit cards also come with lengthy introductory periods where you are not charged any interest on your purchases or bank transfers.
II. Makes it easy to manage your balances
If you often carry your balances into the next month, then you should give low-interest credit cards some thought. It significantly lowers the total interest you will pay and also makes it easier to calculate and manage your more significant credit balances.
III. To improve your credit score
By managing your balances, low-interest credit cards make it easier to pay your monthly installments on time. Your bank records these transactions and sends them to credit bureaus. You can, therefore, use them to build your score with each on-time payment you make.
Criteria used to rank the best low-interest credit cards
- Minimum eligibility requirements
- Introductory rate and period
- Annual APRs
- Availability of 0% interest
- Rewards and cashback programs
- Balance and credit card transfers
Top 10 low-interest credit cards
How to obtain a low-interest credit card?
I. Negotiate a lower rate
The first and most recommended method for getting a small interest credit card is to negotiate with your current credit provider. Call and ask them whether you can get a lower rate on your credit card. Most lenders have set terms on how to inch closer to lower interest rates. It may include paying your balances on time, using your card more often or even being a loyal customer with the lender.
II. Transfer to credit with low interest
If you are currently paying more than you should, and there are better options, you can apply for a new credit card that has low interest. You can also transfer balances, although this may put you in an awkward position if the balance is significant to start with.
III. Work on your credit score
As with most line of credit products, interests tend to go higher when you have a poor track record with credit bureaus. Lenders consider those with bad/poor credit score to carry a higher risk of default. You should, therefore, work on developing a creditworthy history. There are various ways to do this, but it mainly involves borrowing and paying back on time. With a high score, you can easily qualify for low-interest credit cards
There are several other low-interest credit cards available for eligible candidates. When looking for a low-interest credit card, it is recommendable to compare as many options as possible. This will help you identify offers with the best rates and terms. Having the lowest APR does not necessarily mean the offer is better. It may be tied with annual fees and transfer rates that make up for the low-interest rate charged. You should, therefore, look at all the critical aspects before choosing your card.
Credit card interest rates vary from lender to lender. However, cards like PenFed, Blue Cash, and BankAmericad offer some of the lowest rates in the market. Refer to the above list for the actual rate.
Each lender works differently. The general rule of thumb, however, is to charge interest whenever you carry your balance beyond the grace period allowed.
Yes. You can avoid paying interest on your credit card if you pay the owed amount in full every month. Paying on time also helps you avoid other charges such as late payment.
To get a low-interest credit card, you must, either negotiate with your bank for a lower rate or transfer your balance to a card with low interest.
If you pay the minimum amount every month, you won’t be charged any late fees. However, you will still pay interest. It is recommendable to pay the full amount if you want to avoid any extra fees.
An annual percentage rate is the yearly interest rate charged on your credit. For instance, if a bank has a 24% APR, it means they charge 2% interest per month on the monthly balances you carry.
Late payment fee or APR is the additional fee charged when you fail to pay the minimum amount required on your credit.
Most lenders provide their annual rates in APRs. However, many of them charge every month. Interest is charged on the existing monthly balance you have on your credit card.
Paying your credit card balance before the bill arrives is a great way to ensure you have no balances carried to the next month. It also attracts lower interests and might improve your overall credit score.