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How to compare and find the best low rate credit card

Credit cards can be useful if you find the right one for your circumstances. Here’s how to compare and find the one that fits into your life.

Having a credit card can make life more convenient.

Before you apply for a credit card think about why you want it, and how you are going to pay for it.

If you want to use it to pay off other debts consider whether a personal loan or credit card would suit your needs better.

If you decide a credit card suits your needs you should be aware that not all credit cards are made equally, so it’s worth shopping around to find the best credit card to suit your needs.

If you regularly don’t pay off the full balance owing on your credit card, or want to pay the balance off over time, you can reduce your interest payments with a credit card that charges a low interest rate (a low rate credit card).

A good low rate interest card should offer a competitive interest rate and low fees.

Credit card providers tend to keep additional features to a minimum in order to maintain these low rates, so if you’re not looking for these additional features, your best option might be a no-frills credit card.

Here are a few things to look for:

Check interest rates

When shopping around for a credit card, the most obvious difference you’ll notice is the interest rate of each.

Interest rates can sometimes be in excess of 22.00% p.a., If you will want to avoid that higher end of the scale, instead, opt for a low interest credit card.

On average a low rate credit card has an interest rate up to 14.99% p.a. This is important if there is a chance you won’t be paying off the total balance every month, as a lower rate means you will be charged less interest.

When comparing interest rates look for:

  • promotional interest rates – some cards offer a short-term interest free period, which can be useful for repaying an immediate cost
  • standard interest rates – you will want the lowest standard rate you can for your long-term benefits
  • balance transfer rate – some cards have an interest-free period for balances that are transferred over, and this is useful if you have an existing debt to repay
  • cash advance interest rate – which applies to ATM cash withdrawals, foreign currency purchases and gambling. This rate is commonly in excess of 22.00% p.a. and often applies as soon as you make the transaction. Where purchase transactions may have the benefit of an interest free period.


Look for interest-free days

An interest-free period is a great feature that allows you time to pay for your purchases without paying any extra.

A credit card that gives you a good length of time to pay off the charges – usually somewhere between 30 and 55 days – without interest is invaluable. This interest-free period rolls around on a recurring basis.

Be careful with Rewards Credit Cards

Credit cards with rewards points attached to them usually have high interest rates and annual fees, so it’s a good idea to work out whether the points are worth the extra payments you may be subject to if you don’t pay off the full balance each month, and that you are able to pay off the monthly balance to avoid paying interest.

ASIC’s Peter Kell 1 suggests avoiding these points schemes. “Try not to base your choice on reward points, no matter how aggressively they’re marketed to you,” he tells Money Smart.

Ask about other fees and charges

There may be other fees and charges incorporated into a credit card. These can include an application fee, annual fee, charges for additional cards, reward program fees, and a late payment fee. Be aware of these before signing up.

Compare the cards

When considering a credit card, ask the supplier for a key fact sheet that gives you the key information you need to compare it with other credit cards, such as the minimum credit limit, the minimum repayment, interest rate on purchases and cash advances, and fees. Each credit card provider publishes a key fact sheet on its websites, which can be a simple way to compare each.

Comparison websites are also handy for an overview of credit cards on offer, however Money Smart recommends going directly to suppliers for more details when you’re doing a comparison.

Check out Australian Unity's Low Rate Visa Credit Card.

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Important information

Fees, charges and lending criteria apply and product terms and conditions available on application. Please refer to Terms of Use before applying for any product.

Any advice does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you and read the relevant terms and conditions (including Terms of Use), any Product Disclosure Statement (if applicable) and Financial Services Guide before acquiring any product.

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1 Source: Money Smart on 01.04.2019