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Best Low Interest Credit Cards

Michelle Brooks

Michelle Brooks

Financial Advisor

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The credit card industry is booming; lenders are doing everything they can to try and entice consumers into taking on debt. Credit cards are a form of revolving credit, meaning they are unsecured and only have to be paid back if they are used. While this may sound great, it also means they have higher interest rates than traditional forms of credit.

In recent years, credit card companies have begun to enhance the rewards on offer through their credit cards – it has done wonders in getting consumers to sign up for high-interest cards. This has had consequences for those who are irresponsible spenders, as they have worked their way into a debt trap that is hard to escape.

But there are other types of cards on the market as well – low-interest cards. These cards don’t offer the same types of rewards as traditional credit cards, but they allow their users the peace-of-mind that they won’t be trapped by high-interest debt if they begin to carry a balance on their card. If you’re someone who regularly carries a credit card balance on their card, you may benefit from having a low-interest card.

It is very important to note that while these cards are ‘low-interest’, when compared to other forms of debt they are still high interest. This article will outline the various things to look for when deciding on a low-interest credit card. It will also provide the advantages and disadvantages of having a low interest credit card.

What to Look For

When applying for a low interest credit card there are two primary factors that you should consider: interest rate, annual fee, and interest calculation method.

  • Interest Rate – It may seem intuitive but the primary factor in deciding on which low interest credit card to choose should be the interest rate on the card. Low interest credit cards typically have interest rates between 11-14%, although there are some recent cards that have advertised rates of below 10%. If your card has an interest rate about 15%, it isn’t low interest.
  • Annual Fee – People searching for a low interest credit card should consider it a card that saves costs at all opportunities. That’s why it’s important that your low interest credit card also has no annual fee. Many rewards cards charge high annual fees, but a low interest card should have no annual fee – which is another great way to save money. Don’t be enticed by low interest cards with annual fees, there are plenty without them.
  • Interest Calculation Method – Most card providers will charge interest to the remaining balance on your card after you’ve made your monthly payment. But others will calculate an average balance for the month if you don’t pay your bill in full. If you have a choice, go with a card that only charges you interest on your remaining balance, it normally turns out much more affordable.

Always read the fine print. You will find that there tend to be additional benefits and drawbacks when you look at the actual contract that you’re signing – you should be as aware as possible of what you’re agreeing to.

 

Advantages

The advantages lie in the cost saving that you benefit from when you have a low interest credit card. If you carry a balance on your credit card, this is especially true. People get lured into high interest cards because of various rewards schemes and offers, but it means that they end up paying large amounts of money back over time due to the cost of the interest payments. If you’re looking for the most affordable way to have a credit card, your best option is most definitely a low interest credit card.

 

Disadvantages

The primary disadvantage of a low interest credit card is simply the fact that you don’t get any rewards or benefits from holding the card. This is primarily true for people who pay off their balance in full, and therefore don’t end up paying interest. If you pay your balance off in full every month, it may be better to get a credit card that has a rewards program attached to it.

 

Build Your Credit

Having credit in the United States is extremely important. If you want to a buy a house, a car, or lease an apartment, you’ll have to have a good credit score. It’s often hard to get high-end credit cards without having a credit score. But low-interest credit cards have become a great way for individual to start building their credit. They’re typically easier to acquire and they also help you avoid getting into too much debt.

You’ll find that accumulating debt is much easier with a travel card or rewards card – it’s simply too easy to start racking up money when you have a high interest rate to pay on what you owe. If you want to start with something that gives you breathing room, definitely don’t go for one of those types of cards.

Some low-interest cards will allow you to make a deposit of your limit total. You can then be approved for the card automatically and be required to pay very little interest on what you owe. Should you default on the debt, the amount that you have put down as a deposit will cover what you owe. This is by far the easiest way to get a credit card if you have little to no credit. And it also gives you the peace-of-mind that you can pay off any debt that you accumulate. Of course, the downside is that you have to put money into the deposit – if you don’t have the money to cover the limit, then you can’t afford to get the card.

Interest-Free Period

Not all low-interest credit cards have an interest free period, but some of the best ones do. This is a great benefit that can help you save serious money – especially if you anticipate having some large costs in the near future. Many interest free periods last up to 18 months, which is a considerable amount of time. If you have trouble paying off your balance in full, this is another great way to ensure that you don’t get into a debt trap.

 

Other Features

As mentioned throughout this article, low-interest credit cards don’t typically come with too many added benefits. The fact that lenders don’t receive as much income from your debt means that they don’t give out as many benefits. But there are still some great features on offer from a few of the best interest-free credit cards. Below are three additional features you should look for when deciding on a low-interest card. These features are typically in the fine print, so you’ll have to do some looking if you want to find them.

 

Extended Warranty

Many low-interest credit cards offer extended warranties on products you purchase with the card. This is great if you’re trying to purchase expensive electronics or other items that you are worried might break. Some of these extended warranties extend your coverage for twice the length of the original warranty.

The problem is that many borrowers don’t even know that they have this coverage. Make sure that you read the fine print and find out if you have this feature – it could save you a lot of money if something breaks in the future.

 

Price Protection

This is another feature that has grown increasingly common with low-interest credit cards. Price protection will refund you the costs of a price change in a product that you purchase with the card during a certain time frame. If a product you have purchased reduces in price relatively close to the time that you purchased it, you’ll find that some card providers will refund you the difference. This is an awesome feature that can save you money if you remain aware of prices. You’ll need to be vigilant to take advantage of this benefit.

 

Zero-Liability

Zero-liability is an advantage that is shared by most major credit cards, not just low-interest cards. This benefit means that you will have no liability for any fraudulent charges that are placed on your card. This makes using a credit card a much safer option than a traditional debit card. This is especially true in the world of online shopping – your card details can easily be stolen and used for nefarious reasons.

If it is a debit card that you’re using, fraudsters can drain your bank account extremely quickly. It can then be very hard to get your money back. But credit cards use the banks money, and you can refuse to authorize a transaction that you didn’t make. It’s much smarter to shop with a credit card with the amount of online fraud that occurs in modern times.

 

Free Credit Updates

Another great feature that plenty of low-interest credit card offer is a free credit updates. Normally, you would have to pay to see your credit score by submitting a request through one of the credit reporting bodies. But a lot of the best low-interest credit cards offer free credit updates. You typically access your basic credit report through an app or website associated with the card. You can also set up alerts that will tell you if something suspicious is happening with your card. This can help you avoid fraud and maintain a solid score for future credit applications.

 

Process

Applying for a credit card used to be a real hassle. Typically, you would have to go into a bank branch and submit all your details. Lenders would then take considerable time trying to decide if you were a worthy applicant for the card. The entire process could leave a really bad taste in your mouth – as well as get you absolutely nowhere if you ended up being declined.

But now you can streamline the entire process. You don’t need to go into a bank anymore to apply for a card – although you still can if you prefer to. Most people now just use online applications for their credit card applications, which is much easier and way more painless. You don’t have to deal with massive head aches and waiting times to get things done. In a matter of ten minutes, you can input your personal information into an online portal and receive a decision.

Many credit card companies will send you paper applications in the mail to try an entice you to apply for their credit cards. You can fill out the form and return it in the mail for free – but we highly recommend that you don’t do this. One of the brilliant things about online applications is that it keeps your personal information away from prying eyes. Putting your SSN on a paper application in the mail is never a good idea. It can leave you open to identity fraud, amongst other things.

 

Verdict

Low interest credit cards are some of the best cards on the market. Considering the majority of American credit card holders carry balances on their cards, low-interest credit cards can save people serious money. If you do pay off your balance in full, you may want to consider a high interest rewards card as the added percentage will not impact you. Make sure to consider all the factors outlined in this article prior to deciding on the card to opt for.

Once you’ve decided on whether or not you’d like a low-interest credit card. Make sure to check out some of the ones that we recommend on our homepage. We’ve done extensive research to provide you with a comprehensive list of the best low-interest cards. You can click directly through to the application page, which can help you speed up the entire process.

If you find that you have limited income, or that you’ve struggled to pay off debt in the past, a low-interest credit card really is the best possible option for you. It provides you with the ability to build your credit without getting into a credit trap. Make sure to take advantage of any of the additional benefits the card might offer.