Compare the Best Low APR Credit Cards

What is a Low APR Credit Card?

A low APR credit card is a credit card offering a relatively low annual percentage rate (APR) on purchases and/or balance transfers. This can benefit cardholders who may carry a balance on their credit card from month to month, as a lower APR means less interest paid on the outstanding balance.

A low APR means that you will pay less in interest charges, allowing you to save money in the long run. Whether you’re planning to make a large purchase or carry a balance from month to month, a low APR credit card can significantly reduce the financial burden on your shoulders.

Types of Low APR Cards

When it comes to low APR credit cards, there are a few different types to consider:

• Balance transfer credit cards: These credit cards allow you to transfer balances from high-interest credit cards to a new card with a low APR. This can help you consolidate your debt and save money on interest charges.
• Rewards credit cards with low APR: Some credit cards offer both a low APR and attractive rewards programs. These cards allow you to earn points, cash back, or travel rewards while enjoying a lower interest rate.
• Secured credit cards with low APR: If you have a limited credit history or poor credit score, secured credit cards can be a viable option. These cards require a security deposit, but they often have lower APRs than unsecured cards.

What is Considered a Low APR for a Credit Card?

When considering low interest credit cards, it’s common to first think about cards with 0% introductory offers. However, even these cards have a regular interest rate that applies after the introductory period ends. These regular APRs determine whether a card truly falls into the “low rate” category. It’s important to understand the average rates to identify cards with the best offers.

The average interest rate for different types of credit cards can vary significantly. For example, what may be considered a “low” APR for a retail card may fall within the mid-to-high range when compared to low interest balance transfer credit  cards. As a result, the overall average APR across credit card categories ranges widely between 16% and 31%.

Despite this wide range, it is possible to develop a general sense of what may be considered a low APR card. Here are the average interest rates for credit cards based on credit score:

Many low APR credit cards also offer introductory APRs for a certain number of months on balance transfers or purchases. For example, a credit card may offer 0% APR for 18 months on both purchases and balance transfers or 18 months on balance transfers only. It’s important to note that the intro APR on balance transfers does not include balance transfer fees, typically around $5 or 3% of the transfer amount, whichever is greater.

Why Choose a Credit Card with a Low APR?

Low APR credit cards are those that charge the least amount of interest for qualified cardholders who carry a balance. If you’ve ever carried a balance on a credit card, you likely know why your annual percentage rates (APRs) are important. When you choose to make only the minimum monthly payment on your card, any remaining balance earns interest. The result is then added to your next bill.

In other words, the higher the interest rate on your credit card, the more you will owe the issuer on balances carried from month to month. For instance, let’s say you make your monthly payment and leave a balance of $1,000. Here’s how two very different APRs would play out:

• 10% APR – $8.22 in interest accrued
• 20% APR – $16.44 in interest accrued

If this result seems a bit confusing, it’s because interest calculations for credit cards are based on a specific formula, which you can learn more about here. Either way, the point is easy to see: low APR cards can help you save more when you can’t make your monthly payment in full. In the long run, this makes it easier to pay off any debt since you won’t accrue as much interest over time.

Benefits of Low APR Credit Cards

Here are a few more benefits of low-APR credit cards.

Substantial Interest Savings

Firstly, low APR credit cards provide an opportunity for significant interest savings. With a lower APR, you can pay off your balance faster and save money on interest charges. This is especially advantageous if you carry a balance on your credit card from month to month.

Attractive Introductory Offers

Low APR credit cards often offer tantalizing introductory offers, including 0% APR for a specified period. These cards allow you to make purchases or transfer balances without incurring interest charges—it’s like having an interest-free loan for a limited time!

Improved Credit Score

Additionally, low APR credit cards can help you improve your credit score. By making timely payments and responsibly managing your credit card, you demonstrate to lenders that you are a low-risk borrower. This can open doors to better financial opportunities in the future, such as lower interest rates on loans and mortgages.

Tips for Managing Low-Rate Credit Cards

Here are some valuable tips to help you manage a new low APR card effectively:

• Pay on time: Timely payments are crucial for maintaining a low APR and a good credit score. Set up automatic payments or reminders to ensure you never miss a due date.
• Keep credit utilization low: Aim to keep your credit utilization ratio below 30%. This means using only a fraction of your available credit. Low credit utilization demonstrates responsible credit management and can positively impact your credit score.
• Avoid unnecessary debt: While a low APR credit card can be tempting, avoiding unnecessary debt is essential. Only make purchases you can afford to pay off within a reasonable timeframe.

FAQs

Here are answers to some of the most frequently asked questions about low-interest credit cards: