Fed up of high interest rates? Credit cards offering 0% deals on purchases and balance transfers are great until the introductory period runs out. This is where a low interest rate card can help. Cards with a representative APR of under 15% are generally considered low rate, but some can be as low as 6.4% APR variable for the life of the card (remember credit card rates are often variable so this rate can change).
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Your guide to credit cards
- Annual interest rates are usually lower than those on typical credit cards and 0% cards (after the introductory interest free period ends).
- Though interest rates on credit cards are 'variable', meaning that technically the card provider could change it at any time, the low interest rates usually remain for the lifetime of the card. This means that you could work out exactly how long it will take you to pay off any debt on the card without having to worry about sudden rate rises. Use our credit card repayment calculator to work out how much money and time you could save by making more than the minimum repayment on your credit card.
- Pay the balance in full - if you're able to pay your balance in full each month rather than just make the monthly minimum payment, you won’t need to worry about interest. However if you can’t, the monthly interest on this type of card will be lower than many other cards on the market.
- Credit rating - credit cards offering low rates are usually designed for those with a good credit history. If your credit rating isn't the best and you are considering a credit card, a low APR card may not be the card for you. You can check your credit rating to get an idea of your credit history or use our free card matcher tool to check the likelihood of being accepted for a selection of cards before applying.
- Consider your options - A low rate APR card is exactly that, a card that
offers a low standard rate across all spending. Other credit cards tend to specialise in one area, such as offering introductory rates for purchases or balance transfers, whereas low rate credit cards offer a flat rate across all spending.
Credit cards terms
This refers to the rate of interest that is offered to you when you take out a credit card that offers a very low or 0% introductory interest rate for a set ‘promotional’ duration. For example, a 0% purchase introductory rate for 12 months will mean that no interest will be added to your account for any purchases made for 12 months from the date the account is opened. When the introductory rate ends you will then be charged interest at the card’s standard purchase rate. To ensure you maintain any introductory rates applied to your account you must manage the account in line with the issuer’s terms and conditions. Specifically, that means that you must always make at least the minimum payment on time each month, and must remain within your set credit limit.
Often low APR cards don’t have a 0% introductory rate as they are designed to offer low interest (usually less than 15%) throughout the full term of the card. Remember, it’s important that you compare a range of card types to determine which will suit you best.
This is the minimum amount you need to pay off your card each month in order to keep within the terms of your agreement. This will either be calculated as a percentage of your balance or a cash amount. You can make this payment manually or set up a direct debit from your current account so you don't miss a payment. It's important to remember that paying only the minimum payment each month will add interest onto your existing balance which means it will take you longer to clear your balance and cost you more in interest payments.
APR stands for Annual Percentage Rate and is the rate of interest which reflects all the costs of the credit, including interest charges and other fees (such as an initial arrangement fee and any annual charge). It is 'representative' as 51% of those accepted for the card have to be offered the advertised APR. On a low interest rate credit card this rate will be typically lower than other card types.