Low Interest Credit Card for you

Low APR cards

Low APR credit cards offer a far lower than average rate of interest on balance transfers, without having to pay a fee to move your money. Although you’ll still have to pay interest each month, this will only be around six per cent - a rate that will last for the life of your balance so there won’t be an interest rate jump to watch out for once the promotional period has ended.

Low APR credit card are good for people who tend to regularly or only ever pay the minimum amount off their debt. Different credit cards might have attractive headline rates but they won’t change your bad habits, so if you’re not very disciplined with money, the chances are that you’ll still have an outstanding balance when the interest free period runs out on your zero per cent credit card. This will land you with a much higher rate of interest all of a sudden - but with a low APR card you won’t have to worry about this.

Many also include the same benefits as 0 APR credit card, offering interest free purchases too. But there are still a few things you need to consider when choosing your card.

The rate on other spending

If your card doesn’t come with interest free purchases, or you are out of the promotional period, you need to know the rate you’ll be paying on any more spending you do with your low life-of-balance card. While your low ARP will stay in place until you’ve paid your transfer off, anything you spend on top of this will carry a higher rate.

Where your payments go

All credit cards carry “tiered” interest payments. This means that when you pay money off your card, it goes towards the “free” or “cheap” debt first - those things that carry the lowest interest. Any higher interest purchases, or cash advances you make - that make lots of money for the bank - will be paid off last so that you pay interest on them for as long as possible. This means that if you transferred £3,000 and then spent a further £2,000 on your card, any payments you make against your debt will be first allocated to the £3,000 you originally transferred, and which carries a lower rate of interest. The £2,000 will be left in the account for as long as possible, accumulating interest at its higher rate.

How you spend

You need to be aware that certain types of spending attract different rates of interest. While you can rest assured that you’ll pay the lower rate on your transferred balance, if you take out any cash, do any online gambling, or with some cards even buy gift vouchers, you’ll end up paying an even higher rate than the standard APR - as high as 30 per cent with some cards. And again, this will be the last thing to be paid off from your debt.

Is this the card for me?

The low interest credit card works best for people who either have a substantial amount to pay on their credit card, or who know they will only be able to pay a small amount off each month. If you’re considering one of these cards you should think about how long you think it will take you to pay your balance off - being realistic - and work out how much interest you will pay overall. Then you can compare this to the cost of a zero per cent card - remembering to include the transfer fee and the higher rate of interest after the promotional period - to decide the best option for your personal needs.

Make sure that you always read the terms and conditions of your card so that you know exactly what you’re signing up for and to ensure that you don’t get caught out on any instant cash transactions.