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Low rate credit cards

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Low rate credit cards do what they say on the tin – they offer a low interest rate for the lifetime of the card. They generally have an interest rate of 14.00% p.a. or less, which compared to a standard credit card which may have an interest rate of 22.00% p.a. ; this can mean big savings.

But why choose a low rate credit card when you could get a standard credit card with a 0% p.a. purchase rate offer or a 0% p.a. balance transfer?

Regular credit cards usually put a time limit on these offers. After this time period is up, the interest rate will revert to the standard rate, which can be significantly higher than a low rate card. Although most low interest cards don’t come with 0% p.a. offers on balance transfers or purchases, you know exactly what interest you’ll be charged each month. They can be a good long-term option if you don’t always pay off your card – or forget to!

Features to look out for
Low rate credit cards don’t usually have rewards programs or insurance extras like regular or rewards credit cards do. However, they do have many of the same features, such as interest-free days - which means if you pay your balance off in full then you won’t pay any interest at all. Just like with regular credit cards you can make online or in-person purchases on low rate cards, but you’ll probably be charged for overseas transactions. Cash withdrawals are available, although you’ll pay a higher rate of interest on this than the standard rate on the card.

Fees to consider
Most low rate credit cards will have an annual fee, which is normally under $60. Late payment fees can occur, so set up an automatic monthly direct debit for your minimum payment to avoid fees of up to $30 for missed payments. If you lose your card, you’ll be eligible for a replacement fee. Low rate credit cards often have foreign transaction fees, so if you regularly travel overseas or shop internationally, a credit card that doesn’t charge these fees may suit you better.  

Expect a competitive rate of around 11.00% p.a on a low rate credit card. Some low rate credit cards offer 0% p.a. interest for the first six months, but then rise to around 13 percent after the interest free period is over. Some cards with a higher rate might offer free insurance or cashback when you spend a certain amount, but it’s worth working out how much extra you’ll be spending on the interest rates, and whether these deals are worth your while.

Find out about our simple Low Rate Visa Credit Card.

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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