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It will only take a minute and won’t impact your credit score. Check offers Check offers The average annual percentage rate (APR) charged on a credit card is around 21% (variable), according to figures from the Bank of England. And, while there are many credit cards that charge 0% interest on purchases and/or balance transfers, these interest-free periods are promotional and temporary. They revert to more typical rates of interest after the stated number of months. This means that, unless you clear any balance or transfer it to a card from a different provider (a process also likely to involve a transfer fee), the cost of your debt will suddenly shoot up. Low-rate credit cards present one viable alternative. While they charge interest, rates are low and don’t revert to a higher, post-promotion rate. This means there’s no need to juggle cards to keep costs down and – if you do run up a small balance, it shouldn’t feel like the end of the world in terms of the interest you’ll be charged. What should you consider before applying for a low APR credit card?Your credit score will go a long way towards determining whether your application for a credit card will be accepted. There are various services online that allow you to check your score for free. If your credit score isn’t up to scratch, there are a number of steps you can take to improve it, including:
When comparing low APR credit cards you may want to consider whether a card that offers interest-free spending or balance transfers for a few months first would be beneficial – this could be particularly helpful if you’re paying for a holiday, for example, or if you’re looking to consolidate existing debt. But remember that more competitive 0% credit cards are available. Alternatively, you may want to look for a card that also offers rewards such as cashback or fee-free transactions when you travel abroad. What are the advantages of a low rate credit card?If you have a balance on your credit card and/or don’t pay off purchases within an agreed period (typically 56 days) a low-rate credit card will mean you don’t accrue too much interest. In fact, APRs on low-rate credit card are typically under half charged by a regular credit card. Another big bonus is that you won’t be faced with the choice of either chasing temporary promotional rates or paying sky-high interest on your balance overnight. What are the disadvantages of a low rate credit card?Some low-rate credit cards also charge fees if you are transferring a balance or if you use them abroad, which can add to the cost further. There is also usually a fee to pay if you withdraw cash on your credit card, and keep in mind that interest will be charged from the date of the withdrawal, even if you clear your balance in full that month. A fee will also be charged if you’re late making a monthly payment or if you miss it completely, and your credit rating will be affected too. To make sure you remember to pay on time, it’s worth setting up a monthly direct debit. Personal Loan interest rates and packages are extremely dynamic; they can vary significantly depending on your loan tenure (period), the loan amount, your citizenship status, and your income. To find a more accurate quote, please use MoneySmart’s Personal Loan Calculator at the top of the page and enter the variables as accurately as possible. What makes our personal loan calculator different is that while other calculators ask you to enter interest rate to determine your EMI value, our Personal Loan Calculator will generate a list of loan packages, interest rates and repayment plans tailored to the information you entered. You can always adjust the loan amount and loan tenure to find a comfortable monthly repayment amount. Note that our Personal Loan Calculator can only give you an estimate of the interest rates; the provider has final say on the rates they offer you. The BankAmericard® credit card isn't flashy, nor does it aim to be. You get one of the longest 0% introductory APR periods available anywhere, providing plenty of time to whittle down debt or finance a large purchase. And that's about it. Read our review. Our pick for: Longest 0% intro APR period The Wells Fargo Reflect® Card has one of the longest 0% intro APR periods on the market — potentially approaching almost two years, if you meet on-time minimum payment requirements. You'll be hard-pressed to find a longer interest-free promotion, and it applies to both purchases and balance transfers. Read our review. Our pick for: Longer 0% intro APR period A lengthy 0% introductory APR period for both purchases and balance transfers has made the U.S. Bank Visa® Platinum Card a NerdWallet favorite. Read our review. Our pick for: Long 0% intro APR period The $0-annual-fee Chase Slate Edge℠ is light on flash but features an excellent 0% intro APR period on purchases and balance transfers, plus some other potential incentives for paying on time. Read our review. Our pick for: Travel rewards One of the best no-annual-fee travel cards available, the Bank of America® Travel Rewards credit card gives you a solid rewards rate on every purchase, with points that can be redeemed for any travel purchase, without the restrictions of branded airline and hotel cards. Bank of America® has an expansive definition of "travel," too, giving you additional flexibility in how you use your rewards. Read our review. Our pick for: Ongoing cash back The Chase Freedom Unlimited® was already a fine card when it offered 1.5% cash back on all purchases. Now it's even better, with bonus rewards on travel booked through Chase, as well as at restaurants and drugstores. On top of all that, new cardholders get a 0% introductory APR period and the opportunity to earn a sweet cash bonus. Read our review. Our pick for: Bonus category cash back The Citi Custom Cash℠ Card offers a lot of value for a $0 annual fee: 5% back automatically in your eligible top spending category on up to $500 spent per billing cycle (1% back elsewhere). The list of eligible 5% categories is varied and includes biggies like restaurants, grocery stores and more. And unlike competitors, there's no activation schedule or bonus calendar to keep track of. Read our review. Our pick for: Highest flat-rate cash back Among flat-rate cash-back cards, you'll be hard-pressed to beat the Wells Fargo Active Cash® Card. It earns an unlimited 2% back on all purchases, which is excellent. But in addition, the card offers a rich sign-up bonus and a generous 0% intro APR on both purchases and balance transfers. That's an impressive, hard-to-find combination of features on a card with a $0 annual fee. Read our review. Our pick for: Flat-rate cash back The original 1.5% flat-rate cash-back card still holds its own in a now-crowded field. The Capital One Quicksilver Cash Rewards Credit Card offers a compelling combination of a good rewards rate, redemption flexibility, sign-up bonus and introductory 0% APR period. Read our review. Our pick for: Flat-rate cash back The Bank of America® Unlimited Cash Rewards credit card is one of many 1.5% flat-rate cash-back cards on the market. It comes with a decent sign-up bonus, a generous intro APR period, and the potential to supercharge your earnings through Bank of America®'s Preferred Rewards program. Read our review. Our pick for: Grocery and gas rewards The Blue Cash Everyday® Card from American Express pays elevated rewards at U.S. supermarkets, at U.S. gas stations and on U.S. online retail purchases. The rewards might not be as rich as on the Blue Cash Preferred® Card from American Express, but this card doesn't charge an annual fee either. New cardholders get a decent welcome offer and an introductory 0% APR period. Read our review. Our pick for: Bonus category cash back The Chase Freedom Flex℠ offers bonus cash back in quarterly categories that you activate, as well as on travel booked through Chase, at restaurants and at drugstores. Category activation can be a hassle, but if your spending matches the categories — and for a lot of people, it will — you can rack up hundreds of dollars a year. There's a fantastic bonus offer for new cardholders and a 0% intro APR period, too. Read our review. Our pick for: Bonus category cash back The Discover it® Cash Back earns bonus cash back in quarterly categories that you activate. In past years, those categories have included common spending areas like grocery stores, restaurants, gas stations and Amazon.com. Category activation can be a hassle, but if your spending aligns with those categories (and for most households, it probably will), you can rake in serious rewards. You also get the issuer's signature "cash-back match" bonus in your first year. Read our review. Our pick for: Customizable cash back The Bank of America® Customized Cash Rewards credit card gives you a little more control over your credit card rewards by letting you choose which category earns the highest cash-back rate, from a list that includes gas stations, restaurants, travel and others. You also get bonus rewards at grocery stores and supermarkets, plus a great new-cardholder bonus offer. Read our review. Understanding interest rates and APRsThe annual percentage rate, or APR, is the interest rate your credit card issuer charges on any debt you carry on your card. Some cards charge a single rate for all debt on the card; others charge different rates for different kinds of debt (purchases, cash advances, etc.). APRs are listed on your monthly credit card statement. When you see a reference to a "0% APR credit card" or a "zero percent credit card" it doesn't mean the card will never charge any interest. Rather, it means that the card has an introductory rate of 0% for a certain period of time. That zero percent rate may apply to purchases, balance transfers or both, but it doesn't usually apply to cash advances. Issuers commonly set their rates at a certain number of percentage points above the prime rate, which is the rate big banks charge their best customers. For example, your rate might be "prime + 12 points." If the prime rate was 5.5%, your APR would be 17.5%. With the exception of introductory periods with a 0% or super-low "teaser" rate, you're not going to find a credit card APR lower than the prime rate. Although interest rates are expressed in annual terms, they're usually charged on a daily basis. An annual rate of 19.25%, for example, would translate to a daily rate of about 0.0535%. So for every $1,000 in debt, you'd pay about 54 cents a day in interest. That doesn't seem like much ... but over the course of a month and a year, it really adds up. How to avoid paying credit card interest entirelyMost credit cards offer a "grace period" that allows you to avoid paying any interest at all.
If you're what the credit card industry refers to as a "transactor" — someone who uses their card for convenience and rewards and pays the bill in full every month — then your APR is pretty much irrelevant, because you'll never pay a dime in interest. On the other hand, if you're a "revolver" — someone who uses cards to float purchases they can't pay off all at once and carries debt from month to month — then your APR is very important, because it dictates how much you pay in interest. Whats's the difference between interest and APR?When you're talking about credit cards, there is no difference between your interest rate and APR. They're the same thing. That leads to another question: Why do credit card issuers refer to it as the "APR" rather than the interest rate? Mostly because federal truth-in-lending laws require it. The APR is the “real” annual cost of borrowing money, and it includes not just interest on the money you borrow, but also fees and other charges. With some financial products, such as mortgages, the APR can be significantly different from the stated interest rate. Those other charges are not included in the credit card APR calculation, in large part because issuers cannot predict who will have to pay them or how much they will pay. How do 0% APR offers work?Say you have a card with an introductory 0% purchase APR for 15 months. A "0%" rate means no interest at all will be charged on purchases, in this case for the first 15 months you have the card. Once that introductory period runs out, interest will be charged at the ongoing APR — but only on your balance going forward. There is no "retroactive" interest. (One note of caution, though: If you have a 0% offer, make sure you pay your bill on time every month; a late payment can cancel your 0% rate and immediately move you to the ongoing rate.) Zero-percent periods on credit cards are different from the "no interest for 12 months" offers you see in stores. Those are what's known as "deferred interest." In those offers, you don't have to pay interest during the promotional period, but interest is silently being calculated in the background. If you have any balance remaining at the end of the period, you will be charged interest on your whole purchase, going all the way back to the time of purchase. That could cost you hundreds of dollars.
How credit card issuers set interest ratesCredit card issuers are required by law to clearly state the interest rate on a credit card before you apply. You can find the interest rate (or rates) charged by a card in its "terms and conditions sometimes referred to as the fine print. When looking at a card online, look for a link that says something like "See terms and fees" or "View rates and fees" or "Offer details." The rate will be prominently displayed in a large chart known as the Schumer box.
How your credit score affects your interest rateThe interest rate you pay on your credit card is heavily dependent on your credit history, which is summed up in your credit scores. Interest rates are how issuers put a price on risk:
If a card advertises a range of APRs, a lower score will put you toward the higher end of that range (or you might not qualify for a card at all), while a high score will put you on the lower end of the range. As a very general rule of thumb:
Improving your credit to qualify for a better rateAs with most financial products, the best interest rates on credit cards are available to those with the strongest credit profiles. Improving your credit is the first step toward improving your rate. Steps to take:
The high cost of a higher interest rateA higher APR costs you money in two ways:
Let's walk through an example and see how a higher APR affects you at every turn. 1. Your interest charges are higherIf you have excellent credit, you might qualify for a credit card with a super-low rate, let's say 8%. Meanwhile, a person with bad credit or no credit history at all might only qualify for a "starter" card with an APR of 26%. Let's say each person carries a $1,000 balance from one month to the next:
2. Your minimum payments are higherThe minimum payment on a credit card is typically made up of all the accrued interest, plus any fees, plus a percentage of the principal (the money you actually spent on the card). In this case, let's say that percentage is 1.5%.
3. Your debt shrinks more slowlyNow say that each person has only $50 a month to put toward credit card debt. That's more than the minimum (and paying more than the minimum is always good), but it's not enough to cover their debt entirely. This is a common way people use credit cards — they're "revolvers" who pay down slowly over time.
After just one month, the person with the lower APR is about $15 ahead of the person with the higher APR in the "race" to eliminate their debt. 4. You're in debt longer and pay more to get outSay they continue like this, each paying $50 a month. For each cardholder, the interest charges will shrink each month as they pay down the principal. But the one with the lower APR will get out of debt more quickly and pay less in interest:
Reducing your interest costsAs discussed, you can avoid interest entirely by paying your balance in full every month. But that's not always possible for everyone. Sometimes carrying a balance is unavoidable. Here are some options. Pay more than the minimum dueThe minimum payment shown on your billing statement is the absolute least you can pay without incurring a penalty. It won't get you very far toward paying off your debt, though, as the above example makes clear. To see real interest savings, you need to pay interest on less money, and that means attacking the principal by paying more than the minimum. We've created a calculator to help you see how much you could save in interest by paying down your credit card balance. Enter your balance and choose an interest rate, then see your savings if you reduced the balance by 5% to 50%. See the calculator here. Ask if you qualify for a lower rateThis may be an option if your credit score has improved considerably since you opened the account. The issuer might knock some points off your rate, or move your account to a card with a lower rate. You issuer might say no to your request, but you don't know unless you ask. Move debt to a 0% interest credit cardTransferring high-interest debt to a credit card with an introductory 0% APR period can save you hundreds of dollars in interest. You may have to pay a fee of around 3% of the amount you transferred, but you'll get breathing room to pay down your debt. Keep in mind, though, that 0% interest credit cards are generally available only to people with good or excellent credit. How to compare 0% and low interest cardsWhen choosing a 0% APR credit card, let your specific needs be your guide:
Once you've decided what type of card to look for, compare cards based on the following factors. Dozens of cards offer newcomers a 0% APR period of a year or more when they first open the account. This includes a number of popular rewards cards, where you can get 0% interest for as long as 15 months. If you've got a big purchase coming up and will need time to pay it off, a 0% offer is perfect. In general, the longer the 0% period, the better, but there are a few things to keep in mind:
In general, you can get a card with a 0% introductory period or you can get a card with a low ongoing APR, but there aren't a lot of cards that give you both. If you expect that you'll be carrying a balance regularly, the ongoing APR is an important consideration. If you'll need to transfer a balance, this fee is an important consideration. Most cards charge a fee of 3% to 5% of the amount transferred — equal to $30 to $50 for every $1,000 worth of debt moved to the card. Depending on the APR on the card you transfer the debt to and how long it takes you to pay it off, you could save more in interest than you pay in transfer fees. A few cards charge no transfer fee. Of course, if you're only interested in purchases rather than transfers, this fee is irrelevant. You're unlikely to qualify for a 0% APR credit card unless you have good credit, generally defined as a score of 690 or better. Some cards even require excellent credit, generally defined as 720 or better. It's important to pay your bill on time every month. Paying late usually results in a stiff fee (often nearly $40), and if you're 30 days or more late, it can badly damage your credit score. Finally, a late payment can trigger a penalty APR, jacking up your interest rate as high as 30% in some cases. When you're on a 0% period or have a low ongoing rate, being bumped up to a penalty rate can be disastrous. If punctuality is an issue for you, look into a card's penalty policies (and, for your own sake, work on your punctuality). Saving money is the primary reason to get a low-interest credit card, so you shouldn't be paying an annual fee on such a card. However, some rewards cards with 0% interest periods do charge an annual fee; whether it's worth paying depends on how much you expect to earn in rewards. Most major credit card issuers and many smaller ones give cardholders free access to a credit score. When you're looking to manage debt with a low-interest card, it's smart to keep an eye on your score. As mentioned, many rewards credit cards — usually cash-back cards — offer a 0% interest period. When you're using the card to finance a big purchase, those benefits can amount to an instant discount on the purchase. For example, say you're facing a $3,000 expense, so you get a card that has 0% APR for 15 months, pays 1.5% cash back on purchases and offers a bonus of $200 if you spend $1,000 in the first three months. The $3,000 purchase earns $45 in rewards and qualifies you for the bonus, for a total of $245 cash back. The effective cost of the purchase is $2,755, and you have 15 months interest-free to eliminate the debt. Making the most of your 0% or low interest cardIf your card has a 0% intro period, strive to eliminate as much debt as possible before that introductory period ends and the interest resets to its ongoing rate. A 0% card should be a tool for getting rid of debt, not just a place to park debt and forget about it. If you find yourself moving debt from one 0% card to another but never paying it down, it's time to consider other debt solutions. Although a card with a low ongoing rate can save you a lot of money over time, you're still paying interest. Apply those savings toward whittling down your debt faster. Saving, say, $20 a month on interest means you have $20 more you can use to reduce the balance on your credit card and move that much closer to freedom. With any card, watch your balance. For the sake of your credit scores, it's best to keep your balance under 30% of the credit limit on the card. Under 10% is even better. When balances rise above 30% of credit limits, scoring formulas start to interpret that as a sign of financial stress. Looking to transfer a balance to save money? Our roundup of the best balance transfer cards evaluates cards — including many of the cards on this page — with that specific goal in mind. Do you even need a 0% or low interest card? You might not. If you pay your balance in full every month, the APR on your credit card doesn't matter, because you're never actually charged interest. In that case, consider a rewards credit card, which gives you a little something back very time you make a purchase. Rewards cards fall into two major categories: cash back credit cards and travel credit cards. Can you get a 0% APR credit card?A 0% APR credit card can be useful for consolidating existing credit card debt or making a large purchase. Such cards offer interest-free periods, which typically range from six months to nearly two years, during which you're not being charged interest on your purchases, balance transfers or both.
Is it good to have a low interest rate on credit cards?A low interest credit card saves you money by reducing the cost of debt: When you're paying less in interest, you can pay back what you've borrowed more quickly. A card with a 0% intro APR period will save you the most on interest in the short term.
What Visa credit card has the lowest interest rate?The Titanium Rewards Visa® Signature Card from Andrews Federal Credit Union tops our list thanks to the low interest rates, strong rewards program and no foreign transaction fees — all at no annual fee. This card offers a low variable APR of 10.99% to 17.99%.
Which credit card is best with no charges?Top Zero Annual Fee Credit Cards in India. |