Your idea of a great credit card doesn’t have to be one that includes rewards and perks. Maybe you just want a simple low-interest credit card that minimizes the chances of falling too far in debt.
With hundreds of credit cards available to you, it can be quite a hassle to find the ones with the lowest APRs. Even then, they can differ in terms of other features.
We looked at 105 credit cards, and we picked three different cards that are likely to match your financial situation, spending patterns, and debt management habits.
Best for Those With an Excellent Credit Score
Our Pick: Simmons Bank Visa Platinum Credit Card
There is one credit card at least that offers no balance transfer fees and has a low purchase interest rate. Plus, there’s no annual fee. That’s the Simmons Bank Visa Platinum card.
But you should note, Simmons Bank only accepts applicants with excellent credit.
Best For Paying Off Debt
Our Pick: Chase Slate credit card
If you’re looking to consolidate your debt, the Chase Slate credit card is a great option.
With this card, you get a lengthy 0% introductory balance transfer APR. And, there’s no balance transfer fee for a limited time (the first 60 days after account opening).
Best Card for Those With a Bad Credit Score
Our Pick: The First Progress Platinum Prestige MasterCard Secured Card
If you don’t have outstanding credit and want a low interest credit card, there is a great option for you. That’s The First Progress Platinum Prestige MasterCard Secured Card.
This is a secured card and therefore doesn’t require excellent credit. And it offers a respectable APR, lower than most other secured credit cards.
It does, however, come with an annual fee of $44. This is not uncommon for a secured credit card.
Low Interest Credit Cards Best Features
|Features||Who It’s Best For|
|Chase Slate®||Introductory offer tends to include 0% APR on balance transfers for an extended period of time. Also, balance transfer fees are waived during the first 60 days||People who are trying to pay down their high-interest debt quickly through the use of debt consolidation.|
|Simmons Bank Visa® Platinum||An extremely low regular APR.||People want to minimize their interest charges and don’t care about rewards.|
|First Progress Platinum Prestige||Low APR for a secured credit card.||People with bad credit who might carry a balance occasionally.|
What Credit Score Should You Have
You’re more likely to qualify for a lower interest rate if you have a good credit score. With a FICO credit score of at least 700, you’re in the best position to get lower APRs.
So, if that’s your goal, it’s important to keep credit in pristine condition.
Good credit does not mean an absence of debt. If you have not defaulted on any loans, you can still score well. Even carrying large amounts of debt load may not hurt your chances of approval.
Tip: Keep your credit usage to less than 30% of your total credit card limit to keep your credit score high.
Secured credit cards with bad credit
The alternative for people with bad credit is a secured credit card. It’s mostly the same as a regular credit card, except that it requires a security deposit as collateral.
Normally, the amount of the security deposit is the amount of the card’s credit limit.
Your credit limit, in addition to all activity with the secured credit card, is reported to the credit bureaus. If you practice positive credit behavior, this will help you build or repair your credit.
Generally, if you have bad credit, it’s not a good idea to carry any type of balance on a secured credit card. But, it’s nice to know that you have a low APR if you ever can’t pay off the entire card balance.
Low APR vs. Rewards Cards
Every credit card exists to create a profit for the credit card company that issues it. With every purchase on a credit card, the consumer is taking out a loan where the lender expects to earn interest on the amount lent.
How low-interest credit cards work
Low APR credit cards charge low interest rates on balances carried over month to month but don’t usually offer rewards.
In the eyes of credit card companies, low interest rates are appealing to consumers who tend to carry a balance, thus allowing the issuer to collect interest charges.
Pros & Cons of Low Interest cards
|Usually no annual fees||No rewards|
|Minimizes the interest charges if you carry a balance on the card||Likely to also lack amazing card perks and benefits|
How rewards credit cards work
Great rewards credit cards will award perks such as cash back and points for gift cards and airline miles, but the APR will be rather high.
High rewards are attractive to consumers who are frequent shoppers but do not carry high credit card balances.
Instead, card companies profit from the portion of the card processing interchange fee that merchants pay for every transaction.
Pros & Cons of Rewards Cards
|Earn rewards on your spending||The top rewards cards are likely to have annual fees|
|Cards may come with premium perks and benefits||Relatively high interest rates|
|Rewards programs may be complex|
Deciding on a Type of Credit Card
The determining factor for choosing a low APR credit card or rewards credit card is your tendency to carry a balance. Minimizing the finance charges on a credit card is the primary goal.
If you expect to be carrying a balance on a regular basis, a low-interest credit card would be ideal.
Earning cash back on all your purchases isn’t financially wise if you are carrying a balance that is charged 15% APR, which compounds to even more interest over time.
If you are diligent in paying off your entire credit card balance month after month, a rewards credit card offers the greatest perks.
It doesn’t matter if the APR is 11% or 15% because by paying off the entire balance, card companies will not charge interest and therefore nullifies the relevance of the APR.
Instead, take advantage of rewards or cash back credit cards.
In a nutshell: If you don’t think you’ll be able to pay off your entire card balance on a monthly basis, you should opt for a low-interest credit card. Otherwise, you should get a rewards credit card.
Balance Transfer Credit Cards for Low Interest Rates
Low-interest credit cards can have low APRs for many years to come. But, if you’re trying to tackle your credit card debt right now, balance transfer credit cards may be more useful.
These cards might offer introductory balance transfer APRs that are as low as 0%. Balance transfers can be used to consolidate other kinds of debt (e.g., student loans, personal loans, etc.) in addition to credit card balances.
Tip: To ensure maximum effectiveness of a balance transfer, you should avoid making new purchases or cash advances on the credit card. Those will not only come at a different interest rate than the transfer, but they can also cause you to grow the balance you’re trying to shrink.
When you don’t have to pay any interest on your balance, you can focus on reducing the debt. Plan out how much you have to pay every month in order to eliminate the transferred balance before the introductory period ends.
Note that many credit cards will charge a balance transfer fee. It often costs 3% to 5% of the amount transferred. Be sure to account for this cost.
How Credit Card Interest is Determined
Even the lowest APRs on credit cards may appear high compared to the interest rates on other types of loans.
The reason is credit cards are not tied to any form of collateral. (Unlike the homes and vehicles that are financed by mortgages and car loans that can be taken by the bank in case of default).
The APR for your credit card can vary depending on your credit score. The higher your credit score, the lower your interest rates.
It should also be noted the credit card interest rate that you end up with is calculated by the card company’s formula.
Most commonly, card companies start with The Wall Street Journal’s Prime Rate.
Then, depending on your creditworthiness, card issuers add a certain percentage to that rate. The riskier you are as a borrower, the larger the amount that is added to the Prime Rate.
How to Improve Your Credit Score for Low Interest Rates
To be eligible for low interest rates, a higher credit score will help. Keep some of these tips in mind:
Spend what you can afford
Naturally, debit cards and credit cards differ in one basic way. With the former, you’re spending money you already have in your checking account.
For the latter, the money you spend is not yours; it’s borrowed and must be repaid.
The difference between how the two card types work is what causes credit card debt to get out of control. Sometimes, people forget how much they’ve charged to their credit card.
One solution is to treat your credit card as you would a debit card. Before swiping your credit card, ask yourself one question – “Would I be able to afford this purchase on my debit card without going overdraft?”.
Make a habit of this, and it keeps your credit card balance low, and easier to pay off. It also maintains a low credit-to-debt ratio. Each of these things reflects positively on your credit report.
Make smaller “micropayments” each month
There doesn’t have to be an all-or-nothing approach to paying off your credit card bill. Paying it off in full each due date is recommended. Making partial, late, or zero payments isn’t ideal.
One way to make your balance work to the benefit of your credit is to make smaller payments throughout the month. These payments (also called micropayments) can lower your debt utilization ratio. At the same time, they keep a healthy amount of active credit on your card.
This will also show up on your report as evidence that you’re using your credit card responsibly. Time your payments so that you’ve paid off your full balance by the end of the billing cycle.
Ask for more credit
Asking for a higher credit line does not necessarily result in more debt.
While you’ll always want to keep your debt utilization on the lower end, increasing your credit limit can help boost your credit score. That’s because it shows your credit card provider that you can manage a higher balance. Plus, those low-interest rates stay where they are.
However, if you request an increase, the application process may include a hard check to your credit.
This can ding your score – not a good idea if your credit is low. If you’re confident that it’s in good shape, go for the higher credit limit. The good thing about it is that it not only can boost your credit, but you’re also not obligated to utilize all of it.