How to Compare Low Interest Rate Credit Cards: part 2
Low Interest Rate Best Buys
Low Interest Rate FAQ's
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When you compare low interest rate credit cards it's important to know what to look for and also what to watch out for - to make sure you're choosing the best deal for you.
Read on to find out how to compare, choose and apply online for your perfect low cost credit card.
What to look for...
- Look for the lowest typical APR, or interest rate on purchases
When comparing low interest rate credit cards you should look for the most competitive typical APR.
The typical APR is a good guide to comparing the cost of credit that each low interest rate credit card offers. The APR is the standard interest rate charged on purchases over a year, plus any annual fee that may be charged.
Most low interest rate credit cards do not charge an annual fee, so the APR quoted will be just the standard interest rate charged on purchases.
The 'typical' APR is the rate that most people will be offered, at least two thirds of all applicants. However, depending upon the low interest rate credit card chosen you may be offered a different APR depending upon your credit rating and financial circumstances.
Currently, the lowest standard rate is offered on the Capital One Platinum credit card and the Barclaycard Flexi-Rate credit card (if you pay back at least 10% of your balance each month).
- Look for the lowest interest rate on cash transactions
If you are planning on using a low interest rate credit card for cash transactions you should also choose a card with a low rate of interest on cash transactions.
Cash transactions include withdrawing cash from an ATM machine, getting 'cash back' at the supermarket, buying foreign currency or traveller's cheques and also gambling transactions, including any transaction made at a casino or gambling establishment.
It is also important to bear in mind that credit card cash transactions often carry a handling fee, so you should look and see how much each low interest rate credit card charges.
It's important to remember that very few credit cards include cash transaction in the interest free period. This means that if they aren't included in the interest free period, and you repay your balance in full and on time each month you may still be charged interest on your cash transactions.
- Does it offer an introductory promotion?
Although not a primary deciding point, you may want to consider looking to see if the low interest rate credit card offers an introductory promotion.
Some low interest rate credit cards will offer an even lower or 0% interest rate on your purchases for an introductory period of time, which could be worth making use of if you are looking to make any large purchases in the near future.
- Does it offer any additional rewards?
You may want to see if the low interest rate credit card also offers additional rewards with their low interest rates.
If you regularly use a credit card for your everyday spending, even if you don't always repay the balance in full, you could be earning yourself rewards or even cash back on all your purchase spending.
It's important to note that this should be a secondary consideration when choosing a low interest rate credit card. There is not much point earning cash back when you carry a balance from month-to-month unless the credit card also offers a competitive low interest rate on your purchases. Otherwise you will be paying out much more in interest than you will be able to earn back in rewards or cash back.
What to watch out for...
- Cash transactions
Some low interest rate credit cards do offer very good deals on cash transactions, sometimes even offering the same low interest rate as for purchases, and some low interest rate credit cards don't even charge a handling fee on cash transactions.
However, even with these good deals, you will still end up paying slightly more on your cash transactions than you would if you used a debit card.
- Is there an annual fee?
It's pretty uncommon to find annual fees these days and when you do they tend to be limited to reward credit cards like air mile cards.
However, you should still check to see if there is an annual fee on the low interest rate credit card, as it will only serve to be an added cost.
Don't forget!
- Interest rates are variable
Pretty much all credit card interest rates are variable, including those on low interest rate credit cards.
A variable interest rate may fluctuate inline with the Bank of England's base rate, so if the base rate goes up the low interest rate may go up too, and similarly if the base rate goes down the low interest rate may go down too.
A change in the base rate doesn't necessarily mean the credit card's interest rate will change too - interest rate changes on products are still determined by the issuing bank or building society.
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Compare low interest rate credit cards
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