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Everything you need to know about low-interest cards
Low-interest rate credit cards can help you pay less in APR if you ever have to carry a balance. And in some cases, they offer an introductory zero percent APR period that can provide a temporary break from credit card interest.
You have a lot of low-interest credit cards to choose from, but which one is right for you? Bankrate is here to share the top picks from our personal finance experts and give you some tips on the smartest ways to choose and use a credit card with low interest rates.
In this guide:
A quick look at our top low-interest card picks for 2021
A closer look at Bankrate’s top low-interest credit cards
Discover it® Cash Back
Best for first-year rewards
- This card is best for: Anyone who’s looking for a low-interest cash back card and is OK with waiting for the new cardholder bonus.
- This card is not a great choice for: People who like earning cash back but dislike maintenance, such as activating bonus categories every quarter,tracking spending limits and adjusting their spending habits.
- What makes this card unique? With the Cashback Match™ feature, Discover will match all the cash back you’ve earned at the end of your first year.
- Is this card worth it? The first-year rewards from Cashback Match could be a real windfall, especially if you maximize the bonus categories. The potential value is huge.
Read our Discover it® Cash Back review.
Citi® Diamond Preferred® Card
Best for balance transfers
- This card is best for: Anyone in the market for an introductory APR offer on balance transfers (or purchases) that can help them avoid interest charges for well over a year.
- This card is not a great choice for: Seekers of cash back, points or miles. The Citi Diamond Preferred doesn’t offer a rewards program.
- What makes this card unique? Few cards can match its intro offers on balance transfers and purchases: 18 months at 0% intro APR, 14.74% – 24.74% variable APR after.
- Is this card worth it? The Citi Diamond Preferred won’t earn you any rewards, but rewards might be beside the point for anyone focused on a temporary (but still lengthy) break from interest. If that’s your goal, this card using the offers effectively can help you get there.
Read our Citi® Diamond Preferred® Card review.
Citi Rewards+® Card
Best for points on everyday purchases
- This card is best for: People who want a low-interest card that also earns rewards on everyday spending. In this case, you earn 2 ThankYou Points per $1 at supermarkets and gas stations (on up to $6,000 a year, then 1 Point per $1) and 1 Point per $1 on everything else.
- This card is not a great choice for: Those interested in a card with a higher rewards rate for grocery store purchases. The Blue Cash Everyday® Card from American Express, for instance, earns 3 percent at U.S. supermarkets (on up to $6,000 per year in purchases, followed by 1 percent.
- What makes this card unique? The Citi Rewards+ is the only card that automatically rounds your points up to the nearest 10 points on every purchase, with no cap.
- Is this card worth it? The combination of the intro APR offers on purchases and balance transfers and the rewards program makes this a card a solid option for people who are more Frugal Shopper than Big Spender.
Read our Citi Rewards+® Card review.
Citi® Double Cash Card
Best for low-interest credit options
- This card is best for: People in the market for a low-interest card that also offers the potential opportunity for a flexible monthly payment plan or a loan taken out against their credit line.
- This card is not a great choice for: Those who dislike uncertainty when it comes to credit card offers. Citi cardholders might receive a Citi Flex Plan offer from time to time, but it’s not explicitly guaranteed.
- What makes this card unique? The incentive-driven rewards program lets you earn up to 2 percent cash back on every purchase — 1 percent cash back when you buy, plus an additional 1 percent as you pay for those purchases on your credit card bill.
- Is this card worth it? Citi Flex Plan might seem unnecessary when the card already has an intro APR offer on purchases and balance transfers, but the cash back program does add long-term value.
Read our Citi® Double Cash Card review.
Petal® 2 “Cash Back, No Fees” Visa® Credit Card
Best for credit-building with cash back
- This card is best for: People looking to build their credit profile with a cash back program that rewards them for responsibly making on-time credit card payments.
- This card is not a great choice for: Established credit users who already have solid credit scores. The Petal 2 card is a work-in-progress type of card.
- What makes this card unique? Making on-time monthly payments can increase the cash back rate earned on eligible purposes, giving you even more reason to stay current. Also, you can occasionally earn 2 percent to 10 percent cash back on offers from select merchants in your area.
- Is this card worth it? The Petal 2 is a strong choice for people who want to set goals with their credit and put in the effort to achieve them. It can also be an effective way to earn cash back as you shore up your credit foundations.
Read our Petal® 2 “Cash Back, No Fees” Visa® Credit Card review.
Chase Freedom Flex℠
Best for cash back in multiple categories
- This card is best for: Those who want a high-earning cash back card with an intro APR offer on purchases and an easily attainable sign-up bonus: $200 after spending $500 in the first 3 months after you open your account.
- This card is not a great choice for: People whose spending habits don’t match up with the fixed cash back categories (travel purchased through Chase, dining at restaurants and at drugstores) or the rotating bonus categories.
- What makes this card unique? If you take advantage of the zero-interest offer (15 months at 0% intro APR, 14.99% – 23.74% variable APR after) to make a large purchase, you can use the card’s sign-up bonus to take a $200 chunk out of that balance.
- Is this card worth it? Not many low-interest cards offer the kind of cash back opportunities you’ll find with the Chase Freedom Flex. If you can put in the work to track your spending and maximize the bonus categories each quarter, the returns could be impressive.
Read our Chase Freedom Flex℠ review.
Chase Freedom Unlimited®
Best for large cash back potential
- This card is best for: People interested in earning generous cash back on general purchases and in special higher-rate categories with no limits or spending caps.
- This card is not a great choice for: People who don’t spend much on travel, dining at restaurants or drugstores. Those categories are essential to maximizing the card’s cash back potential.
- What makes this card unique? It’s one of the cards eligible for Chase’s Pay Yourself Back feature, which gives you the option of redeeming rewards for statement credits applied to eligible transactions.
- Is this card worth it? If you can maximize the higher-rate categories while spending responsibly, this low-interest card could pay huge cash back dividends.
Read our Chase Freedom Unlimited® review.
Upgrade Visa® Card with Cash Rewards
Best for fair credit
- This card is best for: People with fair credit scores interested in a cash back card that offers extra incentive for responsibly managing your balance. You earn 1.5% cash back on your purchases every time you make a payment.
- This card is not a great choice for: Those who already have credit scores in the good or excellent range. Their options for cash back cards generally include higher-level cards with more perks.
- What makes this card unique? The low end of the regular APR range (8.99% – 29.99%) is about 7 points lower than the average variable APR. You also get to pay your balance in installment plans lasting 12-60 months (see terms) to help minimize interest charges.
- Is this card worth it? For the right person at the right stage of their credit journey, this card could provide a useful way to develop good credit habits while also earning cash back.
Read our Upgrade Visa® Card with Cash Rewards review.
Blue Cash Everyday® Card from American Express
Best cash back card for families
- This card is best for: People whose daily routines involve a lot of mealtimes and motoring around. This no-annual-fee card can help you earn considerable cash back at U.S. supermarkets and U.S. gas stations, as well as select U.S. department stores.
- This card is not a great choice for: Owners of FICO scores below 670. Like most American Express cards, the recommended credit score for the Blue Cash Everyday is good to excellent.
- What makes this card unique? Most welcome offers provide 3 months to meet the spending requirement, but not this one. You’ll earn $100 back in statement credits after spending $2,000 in purchases within the first 6 months of card membership.
- Is this card worth it? On-the-go families will find a lot to like about the cash back categories, and the lack of an annual fee is sure to appeal to the more frugal heads of household.
Read our Blue Cash Everyday® Card from American Express review.
What are low-interest credit cards?
A low-interest credit card is defined by its APR (annual percentage rate), which can be either variable or fixed. If the low end of the variable percentage range is in the low to mid-teens and the high end is in the low to mid-20s, it generally qualifies as a low-interest card. A card with a fixed APR below 14 percent also qualifies.
A low interest rate credit card might also have an introductory 0% APR offer that gives you a chance to temporarily avoid interest on purchases, balance transfers or both.
Credit card APR, whether fixed or variable, helps determine how much interest you could be charged if you don’t pay your monthly balance in full. Given the cost of credit card interest, it’s important to minimize your exposure to interest charges or avoid them altogether. Bankrate estimates the average credit card interest rate at 16.09% variable as of June 2.
Paying your balance on time and in full every month is the surest way to avoid interest, and the method that we recommend. On the other hand, a low-interest card could help you pay less in interest if you do carry a balance.
Who should get a low-interest credit card?
Credit cards with low interest rates can come in handy for certain types of people in certain situations. You might consider a low-interest card if you’re:
Concerned about the cost of credit card APR
The best strategy is to avoid carrying a balance on your credit card, period, even though that might not be possible in every situation. One advantage of low-interest cards is that if you do wind up carrying a balance, the interest could be less costly.
Also, first-time cardholders might find a low interest rate reassuring. In some cases, so could more experienced cardholders. If your credit score has improved since you were approved for your current card, you probably have a good chance of qualifying for a lower APR on a new card.
If you carry a credit card balance, you’re not alone: According to the National Foundation for Credit Counseling’s 2020 Financial Literacy Survey
, 62 percent of adults have had credit card debt in the past 12 months.
Looking to manage existing debt
If you’re carrying a lot of high-interest debt, a balance transfer credit card with an introductory zero-interest offer could be a true game-changer. By transferring a large balance from a credit card or another type of credit account to a balance transfer card with a 0% interest window, you can temporarily avoid interest charges.
A balance transfer could help you save hundreds of dollars that would otherwise have gone toward paying APR. Even if the introductory offer is low-interest rather than zero-interest, you’d save money as long as the intro rate is lower than what you’re currently paying.
To see what the balance transfer process might look like, you can use Bankrate’s Credit Card Balance Transfer Calculator. After entering the necessary information about your card (or cards), APR, fees and outstanding debt into the calculator, you’ll get a much clearer idea.
Here’s an example using a $5,000 outstanding balance on a credit card with 18% APR vs. a balance transfer card with a 12-month 0% APR introductory offer. The typical balance transfer fee of 3% of the amount being transferred (in this case, $150) would be paid upfront. Even factoring in the transfer fee, a 12-month payoff plan with a balance transfer card would have distinct advantages.
|Credit card with 18% APR
|0% intro APR balance transfer card
Still, remember that for the balance transfer plan to work, you have to abide by the terms and conditions of the offer.
- Pay the balance transfer fee upfront.
- Transfer the balance within the required timeframe (usually within 60 days of getting the card).
- Make every monthly payment on time and in full before the intro offer expires. After the introductory period ends, you would pay the card’s regular APR on any outstanding balance.
Planning a large purchase
In cases where you know you have a large purchase coming up, a low-interest card — or even better, a zero-interest card with a solid introductory offer on purchases — could be a smart choice.
Let’s say you wanted to pay off the cost of an upcoming $3,000 vacation using your current credit card, which charges a typical APR of 18% variable. Your budget can’t absorb paying the entire cost in one payment, so you plan to chip away at it over a period of 12 months. A zero-interest card with a 15-month 0% APR introductory offer on purchases could help you avoid interest for the length of the intro offer.
We used Bankrate’s Credit Card Payoff Calculator to illustrate payment scenarios for different cards, isolating that $3,000 vacation.
|Zero-interest intro card
The only catch is that, like balance transfer offers, the intro offer has an expiration date. You’ll need to pay off your big purchase before card’s regular APR takes effect.
Low-interest rate credit card vs. 0% interest credit card
When it comes to choosing a credit card that offers better terms than what you may currently have, it’s important to make the distinction between low interest cards and cards with introductory zero APR offers.
There are no credit cards that offer 0% interest forever. Many cards have zero-interest introductory offers on balance transfers or purchases, but these offers last a limited amount of time. After the offer expires, you’ll pay the standard APR on any outstanding balances.
A drawback with some balance transfer cards that offer lengthier zero-interest periods is that they may not have rewards programs. In many cases, these cards are designed to help you manage debt rather than earn travel miles or points or cash back.
Some balance transfer offers give you the option of transferring multiple debts to the new card, a process called debt consolidation
. The thing to remember is that the total amount of debt you transfer generally can’t exceed your credit limit.
Alternatives to low-interest credit cards
If you have no credit history or a bad credit score, you might have trouble qualifying for a low-interest credit card. Here are some other options to consider:
Charge cards are a good choice when you make large purchases that you can pay back at month’s end, because you will be approved (or rejected) at the counter, based on your spending, payment patterns and income, because there’s no prearranged credit limit.
These cards are connected directly to your bank or financial institution and require an account for you to make purchases. Debit and credit cards differ in that debit cards don’t have credit limits and aren’t used to build credit.
These cards are not linked to a financial institution like debit cards, but they are similar in that they allow you to spend money you already have. Prepaid cards can help in several ways, such as establishing some healthy spending habits, but they don’t have credit limits and can’t help you build your credit score.
How to get a credit card with a low interest rate
Have a good or excellent credit score
People with better credit scores tend to qualify for lower interest rates on any kind of loan, including credit cards. If your credit is fair or bad, you may not qualify for the most advantageous rates. The first step is to find out what your current score is and check for any issues or errors on your credit report. If your credit needs work, stick to a long-term strategy for improving your credit score.
Do some shopping around
One of the keys to finding a low-interest card is how you compare and evaluate these offers. Go online to sort through your viable options and contact your bank or credit union to see what’s available to you. Find cards in your range, weigh the perks, and pay attention not only to the low ends of the variable APRs but also the high end.
Look for pre-qualified offers
A pre-qualified offer involves an initial evaluation before beginning the actual process of applying. With pre-qualification, you won’t be subject to a hard inquiry that can temporarily lower your credit score.
How we chose our top low-interest credit cards
Bankrate scores individual cards using a 5-star system that measures their overall quality and value. For low-interest cards, we highlighted essential criteria including APR, introductory APR offers, annual fees and balance transfer offers.
Standard APR can range from below 10% to above 20%. Penalty APR is the rate you would incur if you were late in making a payment, and it could approach 30%. With low-interest at the top of mind, we pay particular attention to APR in all its forms.
0% introductory APR offer
This temporary interest-free period can significantly help cardholders who are looking to use the card as a tool to pay down debt.
Is the card’s annual fee worth it? Do the rewards and benefits justify the expense? We take annual fee into account when judging a card’s overall value.
Balance transfer offer
For consumers looking to transfer debt from one credit account to another or consolidate multiple debts, a favorable balance transfer offer could hold the key.
More information on credit cards, interest rates and APR
Still need to do more research? Bankrate has a wealth of resources on low interest credit cards and related topics.
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