Low APR Credit Cards

If you’re not a fan of chasing deals, or if you need to borrow but can’t get the best 0% cards, a low APR credit card could be the answer.

What is a low APR credit card?

A low APR card is a type of credit card which charges low interest rates on an ongoing basis.

With a low APR card you’ll typically pay around 9-13% APR (Annual Percentage Rate) on purchases - the average credit card APR is around 35%. Some low APR cards also offer the same low rates on balance transfers and even cash withdrawals.

What’s the difference between low-interest and interest-free credit cards?

With a low-interest credit card, you pay interest (albeit at a low rate) on any outstanding balance on your card.

Whereas with an interest-free credit card there’s a promotional period (typically 12-24 months) during which you won’t pay any interest on your outstanding balance. However, after this period, if you haven’t cleared your balance you’ll have to pay interest and the rate is likely to be high.

Interest-free credit cards, such as 0% balance transfer and 0% purchase cards, are usually the cheaper option, providing you pay off your debt or switch to a new 0% deal by the end of the promotional period.

What are the benefits and disadvantages of a low-interest credit card?

Low APR credit cards have several benefits:

• The APR is lower than the average credit card APR.

• You can spread the cost of a purchase over a long period; there’s no time limit for clearing your debt.

• Your interest rate won’t jump up after the introductory period, so you won’t need to switch cards to avoid a high interest rate.

They also have some disadvantages:

• You may not get the low rate advertised.

• The low rate might not apply to balance transfers and cash withdrawals.

• Unless you pay off your bill in full each month, your debt can build up even with a low interest rate.

Who should use a low-interest credit card?

You may want to apply for a low-cost credit card if:

• You don’t qualify for a 0% balance transfer or 0% purchase card: A low APR card could be the next cheapest option if you’re looking to spend on your card or you have a balance you’d like to transfer to a cheaper rate.

• You know you’re unlikely to switch at the end of a 0% promotional period: If you forget to switch at the end of a 0% period, you’ll get stung with much higher interest rates. Low APR cards offers consistently low rates for as long as you have the card.

We’re a credit broker not a lender^†

Will I get the low rate advertised?

The bad news is you may not get the advertised APR. Providers only have to give that rate to 51% of successful applicants. The rate you get will depend on your credit score and individual circumstances.

Will I need a good credit score to get a low-interest credit card?

To get the cheapest credit card rates, you’ll need a good credit score. If your credit score is less than perfect, you may still be accepted but the rate you’re offered may be higher than the one advertised. If you have a poor score or no credit history, you may not qualify at all or only be offered a high rate.

What credit limit will I get on a low-interest credit card?

Your credit limit will depend on your credit score and individual circumstances, such as your income and existing debt.

What are the alternatives to low-interest credit cards?

There are some alternatives you could consider:

• 0% purchase card: If you want to spread the cost of a purchase, a 0% purchase card could be a cheaper option. These let you borrow interest free if you pay off the debt within the 0% promotional period.

• 0% balance transfer card: If you’ve got existing credit card debt, you could consider a 0% balance transfer card. You can move your balance to the new card and pay no interest on it, providing you pay it off before the end of the 0% period. You’ll usually pay a one-off fee to do this so make sure you include this in your calculations.

• Unsecured personal loan: A personal loan may be better if you need to borrow a large amount, such as to buy a new car. This is because you’re unlikely to get a high enough credit limit on a credit card unless you have an excellent credit score and a large income. Also, loan rates for large loans usually beat low APR card rates but you’ll need a very good credit score to qualify for the best loan rates.

• Overdraft: A few current accounts offer 0% overdrafts (either up to a set limit or for a fixed period), making them a potentially cheap and flexible option for small, short-term borrowing. However, don’t go over the limits as the interest rates jump up significantly.

We’re a credit broker not a lender^†

Do low-rate credit cards come with low-rate cash withdrawals?

You may not get the same low rate for cash withdrawals – it varies from card to card.

Even with a low rate, cash withdrawals are best avoided. This is because you’ll typically have to pay a fee and interest is charged from the date of the withdrawal, even if you clear the balance in full that month.

Should I consolidate debts onto a low APR credit card?

It is possible to consolidate existing debts onto a low-interest credit card. But compare this to other options first, such as moving your debt to a 0% balance transfer card or personal loan.

What should I consider before applying for a low-interest credit card?

Here are some things to consider:

• Think about how you’re going to use the low-cost credit card (for example, for purchases or a balance transfer) and make sure you apply for one that offers the low rate on that type of transaction.
• It’s a good idea to improve your credit score if you can. The better your credit score, the more chance you’ll have of getting the card you want.
• Even with the lowest APR credit cards, you’ll still be paying to borrow so make sure you can afford to do so.
• Check that a low APR card is the cheapest way to borrow for your situation.

What bank credit card is best?

You can compare credit cards with Experian and see which deals you’re likely to be approved for. Comparing cards with us only leaves a soft search on your credit record, so it won’t affect your credit score.