Worried about interest rates? Don’t be. Low interest credit cards are for you. Learn more.
Low interest credit cards are designed for those that don’t pay off their balance in full each month.
If you plan on carrying a balance on your credit card, and let’s face it sometimes this is unavoidable, as large unexpected bill (car repairs etc.) can come up, then the interest rate associated with your credit card becomes really important.
The higher the rate, the more you have to pay for using the card for your purchases.
Using the simple example of the purchase of four new tyres for $1,000 paid off over a year.
|$1000 @ average rewards/cashback card interest rate of 20.95% per annum (p.a.)||$209.50|
|$1000 @ average low interest rate card rate of 13.50% per annum||$135.00|
The downside of a Low interest credit card is that you receive no rewards or benefits like Airpoints dollars or cashbacks.
Summary of Low Interest Credit Cards
- Save money on interest payments – With a lower interest rate than a rewards/cashback credit card you will save money on monthly interest rate.
- Lower annual fees – Low Interest credit cards tend to have lower annual fees ranging from $0 to $40 whereas, premium cards can scale up to $1,250 per year in fees.
- Balance transfers – For new account holders banks tend to offer an interest free balance transfer. For more information on balance transfer cards click here
- No rewards or benefits – The main drawback of a low interest rate card is that it does not come with the extensive benefits or rewards you get with other cards. Typically, you do not earn rewards on spending, receive cashbacks or get Airpoint dollars. It is also, unusual to receive travel insurance and other benefits.
- Low Interest purchases still add up – Because, you receive a lower interest rate this takes the pressure off paying your balance. This can mean you fall into the trap of making too many purchases and accumulating a large debt.
- Cash Advances – While the interest rate charged on normal purchases is low tha interest rate charged on cash advances is normally far higher.