Compare Low Interest Rate Credit Cards

A low interest rate or low rate, when referring to a credit card, usually means a purchase interest rate relatively lower than the other types of credit cards on the market. For example frequent flyer credit cards, super market credit cards and platinum credit cards may all have a higher on-going purchase rate than a low rate option because of the extra features attached to them.

The purchase rate refers to the interest rate you will pay on purchases you make with the card. It is important to check the rate of each type of interest before applying for a credit card. This helps you understand what you will owe in different situations.

Even on a low rate card, the cash advance rate may be much higher than the purchase rate so you need to be aware of both and know the difference.

The purchase rate applies to purchases made in-store or online and a range of bill payments or direct debits. Cash advances are when you withdraw cash at the ATM or transfer balances from other credit cards.

A low interest or low rate card is advertised and designed to offer the most competitive rate on purchases you make with the card, starting from no debt owing.

A balance transfer credit card is advertised offering a promotional rate to attract new customers who have an existing credit card debt that they want to pay off as quickly as possible with minimum interest.

There is no one ‘best’ low rate or low interest card. What is right for one person will not necessarily suit someone else. That is why it is so important to compare the available cards using our tables and assess each card feature against what you need the card for; i.e. emergency use only, booking holidays or shopping online. Depending on what you want it for, different low rate cards will suit.

If, for example, you want to make purchases on your card and intend to pay them off completely each month, then you might be interested in the card with the longest interest free days (they can vary from 45 to more than 55).

Alternatively, you might be looking for a card you want to use in emergencies only, so you would be interested in making sure the annual fee is low. If you want to shop online using overseas retailers, you will want the card which charges the least for international transactions. These are the sorts of things to consider.

Interest free days are days when purchases made on your card are not incurring interest. This period is from the day you make a purchase until the day that your minimum payment is due.

You need to closely check your statement for details of the dates of the period to understand when payments are due in each payment cycle. If you make purchases on the first day of a new statement period, you are charged no interest until you reach the payment date. If you do not pay off the full amount for that period on time, you will not receive any interest free days in the following period.

Also remember that you need to make that payment on time – the payment needs to reach the card before your period ends. This is likely to be at least 2-3 business days, so always bear that in mind.

There are a couple of tricks you can use to take advantage of the maximum number of interest free days.

Know your statement period to take advantage of interest free days

NAB interest free days, for example, apply from the date the statement is issued and last up to 44 days, so you usually would get roughly until the day your payment is due interest free IF you made a purchase at the start of your statement period. The only way to get the whole period interest free is know when your statement is issued and purchase as soon as possible after that date.

If you make a purchase on the 20th of the month, for example, and your payment due date is the 29th, you will only technically receive 9 days interest free to pay off that purchase because money owing on the purchase on the 29th will be charged interest. That’s why credit cards advertise interest free days ‘up to 44’ or ‘up to 55’.

If you want the maximum time to pay off a purchase you often need to make the purchase at the beginning of your new statement period, that way you get nearly the whole month interest free.

Pay your statement in full

Whatever date you made the purchases on, you have to have paid the amount owing on your statement in full by the due date to enjoy interest free days. You need to carry a balance of $0 in a new statement period for any interest free days to apply.

Many (but NOT all) credit cards have between 42 or 44 and 55 interest free days. You can see how many interest free days a card offers straight away on our features list when viewing any credit card on its own page – just click on the card or on the find out more button.

Interest free days exist to reward customers who pay off their balance in full every month and encourage them to keep their credit card open and continue using it for purchases.

No. Interest free days only apply to purchases, a balance transfer is considered a cash advance, and so interest free days do not apply.

The first step to choosing any credit card, including a low rate card, should always be to compare your options side by side and have a thorough understanding of why you want a credit card and what you intend to do with it. Online comparison sites can provide helpful information and show you the rates and other features of different cards from many different providers in one place.

When choosing a low interest or low rate credit card it’s important to compare more than just the interest rate, too. Other features will be relevant to the decision too, including:

The number of interest free days

This will let you know the maximum number of days you will have to pay off purchases without incurring interest charges within the statement period. For more detail on this see ‘what are interest free days’ and ‘how do interest free days work’. Even though the purchase rate is lower than for other card types, it makes sense to avoid paying any interest where possible.

Annual Fee

The cost of the annual fee can be as little as $20-$30 or as much as $99 or more, and if you are not using your credit card very much, or only have it for emergencies it makes sense to look at cards with a lower annual fee. Additional fees such as international transaction fees or late payment fees might be relevant too, so you should compare these at the same time and assess how likely you would be to end up paying them.

Any applicable balance transfer rate

This is the rate designed to win your business, so you need to look beyond the initial promo rate or offer and consider whether on-going use of the card will benefit you.