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Best Low APR Credit Cards

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by Eric Rosenberg | Updated Aug. 16, 2017
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Overview

If you pay off your credit cards in full every month, you never have to pay interest. But in reality, many people carry a balance for some reason or another. Credit card interest can add up fast, which is why it is important to consider the interest rate each card charges. Below you can find a list of our favorite cards with a low APR. Once you sign up, you can save big on interest for years to come. See More


Best Low APR Credit Card for Long 0% Period

More Details

  • Get 0% Intro APR on Balance Transfers and Purchases for 21 months. After that, the variable APR will be 13.49%-23.49% based upon your creditworthiness.*
  • There is a balance transfer fee of either $5 or 3% of the amount of each transfer.
  • Citi® Price Rewind searches for lower prices online for 60 days for your registered purchases: you can get back up to $500 per item and $2,500 a year.*
  • $0 liability on unauthorized purchases and Citi® Identity Theft Solutions.
  • No annual fee*
  • Free access to FICO® Scores*

Annual Fee

$0

Purchase Intro APR

0% for 21 Months

Balance Transfer Intro APR

0% for 21 Months

Regular APR

13.49% - 23.49% Variable

Benefits

There is no interest rate lower than zero percent, and the Citi® Diamond Preferred® Card offers 0% intro APR for almost two years. New cardholders get 0% intro APR for 21 months on purchases and balance transfers. With no annual fee, this card offers an opportunity to save big on interest charges. In addition, this card offers travel and purchase protection so you can safely shop for anything you need without worry.

Things to Consider

To qualify for 0.0% intro APR, balance transfers must be completed within four months of opening a new account. Balance transfers require a $5 or 3% fee (whichever is greater). After the 0% intro APR period ends, 13.49% - 23.49% Variable APR applies. Your interest rate is based on your credit history and market rates. Cash advances charge 26.24% Variable APR and charge a $10 or 5% fee (whichever is greater) for each advance. Foreign purchases charge a % fee. Late payments and returned payments charge up to $35 per occurrence. In the event of late or missed payments, a variable rate of up to 29.99% will apply.

Our Verdict

If you are searching for a long 0% intro APR period, this is the best card available today. This card is loaded with features that often accompany cards with high annual fees. With no annual fee, price protection, rental car insurance, travel insurance, and an EMV security chip, this card is loaded with features. If you are looking to get out of debt or save on interest, this card is a great choice.

Best Low APR Credit Card for No Balance Transfer Fees

More Details

  • $0 Introductory balance transfer fee for transfers made during the first 60 days of account opening
  • Chase Slate named "Best Credit Card for Balance Transfers" four years in a row by Money Magazine
  • 0% Introductory APR for 15 months on purchases and balance transfers
  • Monthly FICO® Score and Credit Dashboard for free
  • No Penalty APR – Paying late won’t raise your interest rate (APR). All other account pricing and terms apply
  • $0 Annual Fee

Annual Fee

$0

Purchase Intro APR

0% Intro APR on Purchases for 15 months

Balance Transfer Intro APR

0% Intro APR on Balance Transfers for 15 months

Regular APR

15.99%-24.74% Variable

Benefits

Most cards with a 0% APR introductory period make you pay a fee for balance transfers. Chase Slate® is an exception to that rule. Complete a balance transfer within 60 days of opening a new account and pay no balance transfer fee. Then pay 0% APR for 15 months on all purchases and balance transfers, a 15.99%-24.74% Variable APR applies afterward. Pay no interest for more than a year on all purchases and balance transfers with no annual fee. This deal is hard to beat!

Things to Consider

After the first balance transfer or the first 60 days after opening a new account have passed, balance transfers charge a 5% or $5 fee, whichever is greater. After the 15 month introductory period, pay 15.99%-24.74% Variable APR. This card does not charge a penalty APR after late or missed payments. However, late payments and returned payments require a fee of up to $37. Cash advances charge a 5% or $10 fee, whichever is greater and 25.99% variable APR. Cardholders pay a 3% foreign transaction fee when using your card outside the United States.

Our Verdict

With no balance transfer fee for the first 60 days and an impressive 15 month 0% introductory period, you can transfer a balance from a high interest card and pay nothing for more than a year. Even better, use the 0% intro period to pay off your debt for good. While you’re at it, you can monitor your credit with a free FICO® credit score for cardholders. With fraud protection, purchase and price protection, and no annual fee, this card is a winner.

Best Low APR Credit Card for Ongoing Low Interest

More Details

  • 0% Introductory APR for the first 15 months on purchases. Plus, you'll get a 0% introductory APR for 15 months on Balance Transfers made within 45 days of account opening. After that, a variable APR will apply, 13.99%
  • No balance transfer fees
  • No foreign transaction fees
  • Chip technology, so paying for your purchases is more secure at chip-card terminals in the U.S. and abroad
  • Free online access to FICO® Credit Score

Annual Fee

$0

Purchase Intro APR

0% for 15 months

Balance Transfer Intro APR

0% for 15 months (on balance transfers made within first 45 days)

Regular APR

13.99% Variable

Benefits

In the world of credit cards, it can be tough to find a low APR credit card that is great for travel. Barclaycard Ring™ Mastercard® brings you the best of both worlds. Enjoy 0% intro APR for 15 months on balance transfers and all purchases. Plus there are no balance transfer fees, no foreign transaction fees, and the card is chip enabled. If you hate fees and love travel, this is the card for you!

Things to Consider

Balance transfers must be completed within 45 days to qualify for the 15 month 0% intro APR period. After 15 months, the card charges 13.99% Variable APR. Cash advances cost $3 and charge 13.99% Variable APR. Late and returned payment fees may vary by state and are up to $27.

Our Verdict

Card members vote on features and benefits, and the result is clear. This is one of the best cards available today if you are looking to avoid fees and keep interest rates low. With a top interest rate of 13.99% Variable APR, you may not be able to find a better deal. Whether you are shopping locally or traveling across the world, this card is the best option for ongoing low interest rates.

Best Low APR Secured Credit Card for Low Fixed Interest

More Details

  • Credit lines available from $200 to $5,000! Low fixed 13.99% interest rate on purchases - with no penalty rate!
  • No minimum credit score requirements! We invite all credit types to apply! No processing or application fees!
  • Perfect card for establishing or re-establishing credit. Reports monthly to all three national credit bureaus
  • Fast, easy application process. Choose your credit line and open your Personal Savings Deposit Account to secure your line.
  • See additional primor® Secured Mastercard Classic Card details

Annual Fee

$39

Purchase Intro APR

N/A

Balance Transfer Intro APR

N/A

Regular APR

13.99%

Benefits

Late and missed payments happen, and when they do credit scores can suffer. If you are looking for a low interest card with a less than perfect credit history, it can be a challenge. That’s where the primor® Secured MasterCard Classic Card comes in. This card charges a low 13.99% APR from the start, and with a fixed rate it will never increase. As long as you earn at least $100 more every month than your expenses, you are guaranteed to be approved.

Things to Consider

As a secured credit card, you have to make a deposit equal to your credit limit. This deposit is refundable when you close your account. The card charges a $39 annual fee. Late and missed payment fees charge up to $29. Foreign transactions charge a 3% fee. Cash advances are available with a 5% or $5 fee (whichever is greater) and 18.99% variable APR.

Our Verdict

Getting your credit back on track after a string of setbacks can be tough. With the primor® Secured MasterCard Classic Card, fixing your credit does not have to be difficult or expensive. As long as you pay your card in full each month, the most you’ll ever pay is the $39 annual fee. And with a fixed 13.99% APR, if you do carry a balance it will cost you far less than most competing options. If you are working on fixing up your credit while locking in a low rate, this is the card for you.

Methodology SmartAsset has developed a quantitative and independent system for evaluating the relative value of a credit card offer versus other offers in the marketplace. Our system evaluates cards based exclusively on their features, such as their rewards earning rate (if applicable), fees, perks, and rewards program redemption options. The annual rewards values on this page are calculated using annual spending assumptions in various categories such as, but not limited to, gas, restaurants, airfare, and US supermarkets. These spending assumptions are built on research that SmartAsset has conducted on existing no fee credit cardholders. Our promise with our credit card recommendations is that we will always strive to have the most comprehensive, accurate, and objective method of evaluating credit card offers. Any recommendations are solely determined by the result of this research and model, and is never influenced by any fees, commissions, or other forms of compensation that SmartAsset may receive from credit card issuers for leads generated on our website.

Best Low Interest Credit Cards: Everything You Need to Know


The Basics


Credit card companies charge interest on the balance you carry on your card. The amount of interest is called the annual percentage rate, or APR. The APR can start at 0% (usually an introductory offer with an expiration date) and generally tops out around 29.99%. APR is determined by what the credit card company is offering, your credit score and history, and the Prime Rate. The Prime Rate is the lowest amount of interest an institution can charge for a loan based set by the Federal Reserve. Credit card companies add interest percentages to the base Prime Rate, which usually sits in the single digits.

Curious why credit card companies charge interest? You can think of your credit card as a type of loan: You’re able to make purchases up to your credit limit, but if you don’t pay back that amount within a billing period, your balance starts accumulating interest. This is one of the key ways for credit card companies to make money.


What Are Low Interest Credit Cards?


Low interest credit cards are cards that charge less interest than average credit cards. This can mean interest rates from roughly 11% to 24.99% APR. Generally, you can find introductory offers for 0% APR for a set number of months with these cards. It depends on each company, but some cards will have over a year and a half (or more!) or 0% interest.

In many cases you won’t find a rewards program. Low interest cards aren’t designed for those looking to earn cash back or travel miles. Those cards usually come with standard or higher interest rates, and in some cases, annual fees. With low interest credit cards, you’ll find that the focus and biggest point of comparison is the length of the 0% APR introductory period and the subsequent APR.


The Benefits of Low Interest Credit Cards


The benefit of a low interest credit card is just that — low interest. Many credit cards charge higher interest to offset things such as an attractive sign-up offer or great cash back. That’s not usually the case with low interest cards – the appeal is the low APR.

Applying for a low interest credit card could be a good idea if you have a large purchase on the horizon and don’t have the cash available to pay for it outright. Perhaps you’re planning a big event like a wedding, taking a large trip or even just buying an expensive piece of equipment. If you put it on a low interest card with a long introductory period, you have a much better chance of paying it off before interest charges pile on. It’s even better if you can pay off the balance in full prior to the introductory offer expiring. With some cards, you have up to 21 months to do so, which is almost two years to pay off a pricey purchase. Regardless, if you use a low interest card for the purchase you know that if you have to start paying interest, at least it’s the lowest amount that credit cards offer. One word of warning, you’ll only qualify for the lowest interest if you have good or better credit.

If you foresee carrying a balance, you’d benefit from a low interest card, as well. Though it’s ideal to pay off your balance each billing cycle, the reality is that many consumers carry a balance and end up paying interest. If you know that’s your case, or is going to be your case in the future, low interest cards are a good bet. You can limit how much interest you’re being charged by looking for cards that offer low interest rates. Ideally, you should consider the lowest APR and cards with no annual fee. You can save the most money on interest by considering those two factors.


How a Low Interest Credit Card Could Save You Money


Let’s look at an example of how you can save money with a low interest credit card. In this scenario, you’re trying to launch a graphic design side business. You need a new personal computer that can handle the requirements, and don’t have the cash up front to buy it outright. Using a low interest card, you purchase a new computer for $2,700. You have a few potential clients lined up, so you’re confident that you can pay the balance off by the time the 15-month introductory offer expires.

All you have to do is pay $180 a month for 15 months, and you can pay off the balance in full by the time the offer expires. That’s without putting anything else on the card other than the big purchase. If that’s your scenario, great! You basically used the card like a no-interest loan and were able to pay back the amount before getting charged interest.

However, say things don’t go as well as you hoped. You buy the computer and then get laid off at work. The clients you thought you had lined up don’t come through. Now you’re forced to charge a few unexpected items like groceries or home repairs to your card. By the end of the first month, you have a balance of $3,500. You know that you have 14 more months in your introductory offer, so you put the card aside while you job search and use your emergency savings. And then you forget about the card — the introductory offer is over a year, after all — and fail to look at your balance until month 16. Your APR at month 16 is now 13.49%. Using a credit card calculator, you realize that with $200 payments, it will take you 20 months to pay off $3,500. You’ll pay $419 in total interest. With a card that’s not low interest, in this example 20% APR, you would need 21 months of $200 payments to pay off the card. You’d pay $672 in interest, $253 more than the low interest example.

Another scenario you can consider is how carrying a balance with a low interest card compares to a card with higher interest. In this example you know you’re going to carry a balance month-to-month. Perhaps you’re planning a wedding and know that it’s going to take some time to pay back all the charges you’re planning on putting on the card. You budget around $150 per month to pay back the $4,500 that’s on your card. If it’s a low interest card, in this example 12.99% APR, it will take 37 months and you’ll spend $971 on interest. A card with 23.74% APR will take 46 months to pay the balance and you’ll spend $2,393 on interest. By using a low interest card, you save over $1,422.

In these examples you can see how a low interest card could potentially save you money. These cards make sense for some purchase decisions, but not all. You’ll have to carefully review your spending needs before making a decision. Additionally, you have to consider that much of your potential savings depends on what APR you’re approved for by the credit card company. The advertised APRs are not set in stone. Keep in mind the APR you’re approved for depends on your credit score and the company’s current offerings.


The Drawbacks of Low Interest Credit Cards


Every credit card comes with potential downsides and low interest credit cards are no exception. For one, if you’re a frequent credit card user and usually pay off your full balance each month, you may benefit more from a rewards card. Low interest sounds like a good deal, but if you’re a careful user, you may never even pay interest. If that’s you, you’d lose out on cash back or travel miles with a low interest card. While some low interest cards do offer rewards, it’s generally not more than 1% on purchases. That may be enough for you, but again, if you’re a frequent purchaser who pays off your card, you can earn much more with a different card. Some reward cards offer as much as 5% cash back for certain purchases (like gas, dining or travel). If you look at your spending habits and that sounds like you, you may want to consider an alternative to a low interest card.

Low interest credit cards can also lead you down the wrong path if you believe it’s your best bet for carrying a balance. While low interest cards save you from spending the maximum on interest, it’s still not ideal to get into credit card debt. The low interest and long introductory offer might lead you into thinking it’s fine to keep a balance on the card. This is especially dangerous if you’re prone to overspending or maxing out cards. Long term, you’ll still have to pay interest, and that can accumulate quickly. Yes, it would be less interest than that of a card with a higher APR, but it’s still extra money you have to pay. Either way, carrying a balance for an extended period of time is not ideal.

Another concern is if you don’t qualify for the lowest APR. This can happen when the company looks at your credit score and history and decides that you’re a higher risk. Your credit limit can be less than you assume, as well. If that’s your situation, “low interest” might not seem that low in comparison to other cards. It all depends on your financial situation and credit needs.


Who Should Apply for a Low Interest Credit Card?


Low interest credit cards are best for those looking to make a big purchase, pay the least ongoing interest or transfer balances (though there are specific cards designed with that in mind). It’s for consumers looking to pay the minimum amount of interest on purchases as possible. This type of card is not for those looking to earn maximum reward points, cash back or travel miles.

Unfortunately, not everyone can qualify for a low interest credit card. For cards with the lowest APR, you need good or excellent credit scores. This means the minimum credit score is around 670 to even qualify for a low interest card. Luckily, you’re not out of options if you have a fair or worse credit score. You can still qualify for a low APR secured card. Secured cards usually come with annual fees and other restrictions, but they are a good option if you can’t qualify for anything else and want a method to build up your credit again.

Low interest credit cards are best for folks who know how to budget. Good budgeters will know to make a plan for how much to pay each month to meet the deadline of paying off a balance before the introductory offer ends. The ideal user knows how many months he or she plans on carrying a balance and calculates how much it will cost per month. Since it does take good or better credit to even obtain a low interest card, these consumers usually have healthy financial habits.

Some low interest cards come with 0% balance transfer introductory offers and no fees. This is another bonus for those who want to pay off another credit card or other debt without paying large fees and interest. Additionally, if you have a good credit score but want an even better score, you may want to consider a low interest credit card. You should be able to pay off your balance in a shorter amount of time and raise your credit score in the process. Again, it depends on your financial history if you’ll qualify for these type of cards.


What Is a Secured Card?


If you don’t have a good enough credit score to qualify for a credit card, you have the option to apply for a secured card. This type of card is for those with fair or worse credit scores, with scores generally falling below roughly 669. You can improve your credit score by using this type of card consistently and responsibly.

A secured card differs from a normal credit card in that you have to put a deposit down. Your deposit then becomes your credit limit — it’s your collateral. This is because you are deemed a higher risk for credit card issuers. The deposit ensures the issuer will receive the money you charge regardless of if you pay it back. You do receive the deposit back if you close the account and pay back your balance in full.

Secured cards also come with fees, usually an annual fee as well as transaction fees. This type of card also doesn’t include the perks and benefits of other cards, like cash back or introductory bonus offers. It’s meant to help you build back your credit, not much more.

When comparing secured cards, one thing to take into account is if the company to reports to all three national credit bureaus (Experian, TransUnion and Equifax). In order to improve your credit, the issuer needs to send your information to the companies that monitor credit scores and reports. It’s always a good idea to read the fine print before entering any agreement.


How to Evaluate Low Interest Credit Card Offers


Every credit card comes with pros and cons. For low interest cards, there are several factors you want to closely consider. One of these is the length of the introductory offer. If you’re planning on using the card to pay for a large purchase with the intent to pay it back before interest starts piling on, you’ll likely want to find the longest possible introductory offer. That way, you have the maximum amount of time to pay off your balance. The length of 0% APR offers varies by card: You can find some with only six months and others with as long as 21 months.

You also want to consider the length of the 0% APR if you’re planning to use a low interest credit card to transfer a balance from another card. You probably want to find the longest possible introductory period, but you have to read the fine print. Some low interest cards don’t have an introductory APR for balance transfers. That means while your purchase APR may be 0% APR, your balance transfer APR will be in the double digits. Additionally, some cards include a balance transfer fee that’s a percentage of the transfer. For example, if you transfer $2,500 from one card to your low interest credit card, you may be charged a 5% fee, which in this case is $125. You also need to look at time requirements. Some cards have strict timeframes by which all balance transfers need to be completed to receive the 0% rate. This can vary from 30 days to four months, or more. It depends on the card issuer’s terms and conditions. You can the disclosure of rates and fees for every credit card, it’s required by law. Look carefully at the information to see what conditions apply to the card you want.

Another factor to consider when evaluating low interest credit cards is the actual APR once the introductory period ends. If you think that you’re going to carry a balance, this may matter more to you than the introductory period. Interest rates for low interest cards vary, and can fall between roughly 11% to 24.99% APR. You’ll want to compare interest rates between cards to find the one that makes the most sense for you and your spending habits.

You also need to consider fees. Some low interest cards do come with annual fees, foreign transaction fees or balance transfer fees. If you’re planning on using the card domestically, foreign transaction fees might not matter to you. Same for those not planning on transferring a balance — that factor might not have much weight. But if those do matter to you, take a look at other cards that do offer no fees. It may be a better fit for your situation.

One last consideration is whether you will actually get approved for the card. If you have bad credit and notice that the card you want requires good or better credit, it’s not the best idea to apply. Each time you apply for a card, your credit gets a hard inquiry which affects your credit score. Applying for multiple cards and getting denied will damage your score even more if you have bad credit. It’s something to keep in mind as you shop around for cards.

What will help you decide between cards is how you plan on using the card once you get it. Take the time to clarify your intent so that you know what features you want in the card. It’ll help narrow the broad field of low interest credit cards.


How to Evaluate 0% APR Introductory Offers


It can be confusing to decide between 0% APR introductory offers. The offers are attractive for those looking to make a large purchase without paying interest on the charge for a set number of months. With some companies offering more than a year and a half of 0% APR, you can avoid interest charges and work toward paying off the balance by the time the introductory period ends. For some consumers this is ideal — you have a grace period to pay everything back before getting hit by interest.

So how do you choose? Start with length. Many low interest cards have 0% APR for 15 months or more. If you know you need every last month to pay off whatever you’re planning on putting on the card, look for offers upwards of 18 months. However, what you also need to consider is what your APR will be once the initial offer ends. For some cards, the APR jumps up to market rate, which can be as high as 20% or more. Some cards will have lower APR, but come with a shorter introductory offer timeline. You’ll have to read the fine print to find out how it works for the particular card you’re considering.

Those planning to transfer balances have additional concerns. You’ll need to look at the length of time you have to transfer balances before the offer ends. For some cards offering say, 18 months 0% APR, you have to complete balance transfers within 45 days to lock in the 0% APR. Other cards it may be as short as 30 days or as long as three or four months. And some cards don’t even offer balance transfers at 0% APR. It really depends on the particular card, that’s why it’s essential to understand the terms and conditions prior to applying for a card.


What Matters Most When Applying for a Low Interest Credit Card


Determining what matters most in a low interest credit card depends on your specific situation. What matters for your neighbor, spouse or colleague doesn’t necessarily apply to you and your financial situation. Your existing purchase needs, credit card debt and credit score are all factors to consider that will help you determine what matters most.

Some experts will point you toward the card with the longest 0% APR period. And that’s perfectly fine if you need that chunk of time to pay off whatever purchases you’re planning on charging. This factor wouldn’t matter quite as much for someone trying to find the lowest possible APR. While many low APR cards will have long introductory periods, it’s not guaranteed that the longest period will match with the lowest APR.

Finally, if you’re getting the card to transfer a balance from another card, the transfer fees and balance period will matter much more to you.

Reading the full offer for the card you’re interested in is an easy and accessible way to help you grasp what the card offers. Credit card reviews are also easy to find and can help you compare cards and features. Spend some time doing your research, and you’ll be sure to find a card that meets your needs.


What to Do After Choosing a Low Interest Credit Card


Once you’ve found a low interest credit card that fits your needs, it’s time to apply for the card. Most companies offer plenty of application options. You can call, go online or fill out a paper application. If your card is offered through your banking institution or credit union, you can also apply in person.

The length of time from application to approval depends on your application method and the type of credit card you’re applying for. Mailed-in applications will take a few weeks to process as the travel and processing time is longer with paper applications. Phone, in person and online application times vary, but with some you can be approved on the spot, or in about 10 days. Processing time depends on the credit card company and your financial situation.

Card issuers will review your credit score, debt-to-credit ratio and your credit report. The purpose for the review is to see if you’re a risky borrower. All of the information collected is analyzed to help determine your APR and credit limit, which is all based on your credit history.

If your application for a regular low interest card is denied, you can always try a secured card. Secured cards are for those with fair or worse credit scores. The card has restrictions, such as a credit limit tied to a deposit you make, in order to keep the card low risk. These type of cards are best for those trying to build up credit scores. You won’t be allowed to make large purchases or overspend, as the card is limited by your deposit.

You can always reapply for a low interest credit card after you boost your credit score, which can take anywhere from nine months, to years.


What If You Want to Transfer a Balance to a Low Interest Credit Card


If you chose your low interest credit card with a balance transfer in mind, there are certain steps to the process. Generally, one of the first things you should do with a new card is initiate any balances you plan on transferring. Balance transfers are often limited to the first 30 to 90 days opening a new card. It’s essential you don’t wait until the last minute to start the process.

To start you off, first decide how much money you want to transfer. Keep your new card’s credit limit in mind so that you don’t max it out. Ideally, you never want to max out a card as it will negatively affect your credit score. It’s also not ideal in case you run out of cash and need credit in an emergency.

Once you know how much money you’d like to transfer, contact your low interest credit card issuer and let them know you’d like to transfer a balance. You’ll need the account number of your old account to give to your low interest credit card company. The representative will input your request and let you know if any additional information is needed. The transaction can take anywhere from three days to two weeks. It depends on the processing time for each company.

Hopefully the card you choose comes with zero balance transfer fees. If that’s not the case, expect to pay around 3% - 5% of the balance transfer as a fee. For example, if you transfer $3,000 and the balance transfer fee is $5, you’ll pay $150.

Word of warning: If you planned on transferring balances between cards issued by the same company, you can’t. You can only transfer to a new credit card issuer.


How Balance Transfers Can Affect Your Credit Score


First things first: Your credit score is impacted when you apply for a credit card. This is due to the credit report the card issuer pulled during the application process; it’s known as a hard inquiry. This type of ding on your credit score is generally temporary and doesn’t make a huge impact, unless you applied for multiple cards. Multiple applications mean multiple hard inquiries which translates to a lower credit score.

How recent a line of credit is also matters. With your new low interest card, you won’t have a lengthy record yet. It will take time to build this essential factor. The length of your credit history is 15% of your FICO credit score.

Balance transfers can impact your credit score by changing your debt-to-credit ratio. While adding a new credit card does increase the overall credit you have available, it depends on your credit limit. For example, if you have a card with a $6,000 limit with a $1,800 balance, your credit utilization ratio (another way to say debt-to-credit) is 30%. You calculate the ratio by dividing the debt, $1,800 by available credit, $6,000 and multiplying by 100.

A 30% ratio is right at the limit of keeping a good credit score. Once you go above that percentage, your credit score starts to go down. In the case of a balance transfer, for example moving the $1,800 balance to a new low interest card with a $5,000 credit limit, your debt-to-income is now 36% for that card. Your ratio is calculated both for individual cards as well as overall credit. So if you keep that original card open, your overall ratio is 16% ($1,800 divided by the combined credit limits $5,000 and $6,000, x 100). However, if you close the original credit card account, your overall ratio is 36%, and that’s with no new charges put on the card, just the balance transfer.


What to Do After Transferring a Credit Card Balance


Once your balance transfer goes through, you need to focus on paying off the debt. Assuming you picked a card with a long introductory period, for example 18 months at 0% APR, you should set a budget. Divide the total debt you have by how many months left of your offer to see how much you need to pay per month to get the balance to zero. For example, if your balance is $2,000 and you have an 18-month introductory period, you need to pay roughly $111 per month to pay the balance off in time.

You can make it easier on yourself by setting up calendar reminders or notifications. If you like to automate, consider setting automatic payments so that you don’t forget to pay. Remember, the 0% APR offer is only advantageous if you use those interest-free months to pay down your debt. If you leave the balance in the account and neglect paying, you’ll be hit with a nasty surprise once interest starts accumulating.


What to Do If Your Low Interest Credit Card’s Limit Isn’t High Enough


You might find yourself approved for a low interest credit card but with a limit that won’t cover the large purchase you were planning on putting on the card. Or, perhaps you were hoping to transfer a balance from a different card that had higher interest. Now you find yourself with a credit limit that won’t cover either situation.

First, before panicking, consider your options. You can contact the credit card issuer and ask for a credit limit increase. Be candid about why you signed up for the card and what you were hoping to do with it. The issuer may be willing to take another look at your account to see what can be done. After all, you are the customer in this situation. Be aware that a credit increase can impact your credit score and it can also help your debt-to-credit ratio.

If you have decent credit and make payments consistently, you may receive an automatic credit limit increase regardless. But, when you don’t have good credit and ask for an increase, you may actually see your credit score drop. A credit limit increase can be considered a hard inquiry, which can cause your score to fall. Unlike asking for a credit limit increase, an automatic increase is considered a soft inquiry and won’t affect your credit score.


Should You Close Your Credit Card Accounts After Opening a Low Interest Credit Card Account?


Maybe you’ve used other types of credit cards for years and just now found a need for a low interest card. Now that you have the new card in hand, you wonder what to do with your other accounts. Well, the first thing you need to know is that closing a credit card account can negatively impact your credit score. While canceling an account can help keep you from spending on multiple cards and paying multiple bills, it affects your credit utilization ratio.

Your credit utilization ratio is how much credit you’re using compared to how much is available to you. If you have three cards, one with a $2,500 limit, another with $3,000 and the last with $1,500, you have a total of $7,000 of available credit. Now, you total what you have on the cards, in this example we’ll say $3,200. You then divide your debt ($3,200) by available credit ($7,000) and multiply by 100 to get your percentage. In this case, 45%. If you close a card, in this example let’s say the $1,500 limit one, your available credit is $5,500. This bumps your utilization to 58%. That’s not a great number. In general, you want to stay below 30% to keep a good credit score. The lower your percentage, the better.


Frequently Asked Questions:


1. Can anyone get approved for a low interest credit card?

Consumers with good or better credit scores are usually in the best position to get approved for low interest credit cards. You’re seen as less of a risk for the companies issuing cards, and less apt to default on payments.

If you have bad credit and you want to rebuild your credit with a low interest card, you do have the option to apply for a secured card. Secured cards require a deposit equal to your credit limit. In other words, you can only charge as much as you deposit for the card. Your deposit is refundable if you close the account. Secured cards usually have an annual fee as well as a set interest rate. These cards generally do not have introductory 0% APR offers. However, you can often find a fixed rate APR.

2. How can I improve my credit score and qualify for one of the best low interest credit cards?

There are several ways to improve your credit score. First, you can make sure that every credit card payment is on time. If you’re forgetful, you can sign up for automatic bill pay to make your life easier. Payment history does account for 35% of your FICO credit score.

Another way is keeping your credit utilization ratio below 30%. This means you need to avoid maxing out any of your cards — ideally, you want to stay in the 20% and below range.

Finally, avoid opening multiple credit accounts, especially in quick succession. It takes time to build a credit history, but you’ll damage yours if you continually open accounts.

3. How do I decide between low interest credit cards?

Evaluate your purchase needs and intent behind getting the card. With that in mind, find a card that offers the best combination for your needs. It may be a low interest card with no balance transfer fees. Or, it may be the card with the longest 0% APR introductory offer. Whatever features are most important to you will help you decide which card is ideal for you.

4. Do low interest cards charge an annual fee?

You have plenty of choices for no fee, low interest cards. However, you do need good or better credit to qualify for these cards in the first place. If you don’t, you will most likely have to resort to a secured card, which generally comes with an annual fee.

5. Do low interest credit cards come with sign-up bonuses?

The short answer is usually no. While you can find credit cards with sign-up bonuses that offer 0% APR introductory periods for 15 months or so, the APR jumps to market rate after the period. Some of the cards with the best bonuses have annual fees or spending requirements. Most low interest credit cards are not tailored for people looking to max out rewards bonuses and sign-up promotions.

6. When is it a good idea to use a low interest credit card to get rid of credit card debt?

You can use a low interest credit card to pay down credit card debt if a number of factors align. You’ll need good enough credit to qualify for the card in the first place. A card with no balance transfer fee is ideal. Then, it’s important to consider the length of the 0% introductory period. The longer the better so that you can pay off the debt before accumulating interest. Next, you want to take a look at the terms associated with balance transfers. Do you have only a short amount of time to transfer to the low interest card? If so, you need to execute the transfer within the time frame in order to make the most of the 0% introductory offer.

With those elements in mind, you can use a low interest card to help you pay down your debt. Just be aware that your credit limit may be less than you expected after you’re approved. That’s something to consider if you were planning on transferring a large balance.

7. Can I earn rewards with a low interest credit card?

Some low interest cards do offer rewards. It’s not as common, and the rewards structure is usually not the best available, but you can still find low interest cards that offer some sort of rewards. Most low interest cards that do offer rewards only offer 1% - 2% cash back.

8. What will my credit limit be?

It depends. Some card have set limits that are stated outright. Other cards have general limit ranges that you’ll fall into depending on what the issuer determines. And with certain credit card issuers, your limit will depend on whatever internal calculations they use. Sometimes you won’t find out your limit until you’re approved and sent a card. Other times you can find card limits on issuer websites, and in some cases you’ll be told on the spot if you apply via phone or in person. It varies per company.

Your limit is determined by your credit score and other financial factors, such as income and debt-to-income ratio. The card issuer can also compare what limits your other cards have as a marker. Limits also depend on the issuer. Smaller credit unions or banks often won’t have as high of credit limits as larger institutions. Your limit can also increase either automatically or with your involvement, depending on if you pay your balance in a timely manner and demonstrate that you’re a responsible user.

9. How can I find the best low interest credit card?

Figure out what’s most important to you — 0% APR introductory length, no fees or low APR — and do your research. If you know what your ideal combination of features in a card is, you can start narrowing down your choices. Many sites offer reviews and expert opinions, which can help you gain some insight and compare card offers. Additionally, all credit cards have to display certain disclosures, so make sure you read the fine print. You can find the APR and all fees listed in the credit card “terms and conditions,” so that you can make the most informed decision possible.

10. How can I make the most of a low interest credit card?

You should read the fine print and make sure you understand the terms and conditions of your card. Making a plan for paying down your balance before the 0% introductory offer ends is another tactic. Divide your total balance by how many months you have left on the offer. Then, mark your calendar, set up notifications and automatic payments to hit your goal.

If you think you’ll have an ongoing balance, use a credit card calculator to keep an eye on how much interest you’ll pay. That way, you can budget more effectively and keep on top of your balance.


Final Thoughts


Low interest credit cards help consumers avoid racking up excessive credit card interest on purchases. If you know you’re apt to carry a balance month-to-month, it’s best to go with one of these cards so that you avoid paying high interest charges. In fact, the best-case scenario is if you can get your purchases under control and pay off your balance by the time the typical 0% APR introductory period ends. This is also the best bet for those using a low interest card to buy a large item or service, with the intention to pay it off during the APR 0% period.

Photo credits: ©iStock.com/LeoPatrizi, ©iStock.com/Petar Chernaev, ©iStock.com/Kerkez

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