Best Low Interest Credit Cards of 2018 – Bankrate.com

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the bank’s website for the most current information.

Bankrate’s scoring methodology identifies the best low-interest credit card by evaluating each card against a criteria which includes the cards’ variable APR and penalty APR, annual fee, balance transfer offer, rewards value, 0% intro APR offer, and any extras or discounts. To identify the best low-interest credit cards we have focused on the most important elements for low-interest credit card users: APR, introductory APR offer, annual fee, balance transfer offer, and any extras and discounts.

• APR – APR means annual percentage rate and it is the amount of interest you may have to pay on a credit cards outstanding balance. We pay close attention to APR which can be split between “standard” and “penalty.” Standard APR can range from below 10% to above 20%. Penalty APR is the rate you would incur if you were late in making a payment, this can reach almost 30%. With low-interest at the top of mind, we pay particular attention to APR in all its forms.

If you’re like many suburban households, you spend a lot of time and money at the supermarket and at the gas pump. The Blue Cash Everyday Card from American Express offers solid rewards for spending in those areas, paying 3% cash back rewards on up to $6,000 in spending at U.S. supermarkets and 2% back at U.S. gas stations and select U.S. department stores and 1% back on all other spending.

What makes this card intriguing is that, like most Discover cards, the issuer will match your first-year earnings dollar for dollar. The Discover it® Miles card earns 1.5 miles for every dollar, which is a just-OK rate. But the first-year earnings work out to be 3 miles for every dollar, which puts it on a par with some of the best cash-back cards on the market.

The current average variable APR on a credit card is between 16% to 17%. If you typically carry a balance, you can benefit by switching to a card with a lower APR. For example, if you have a balance of $10,000 on a card with an APR of 16%, over the course of a year if you leave that balance untouched, you’ll accrue an additional $1,600 in finance charges. But, shift that balance to a card with an introductory 15-month 0% offer and after a year, that same $10,000 balance won’t have racked up any finance charges, saving you $1,600. Balance transfers onto low interest cards

If you are carrying a lot of high-interest debt, shifting the balance to a card with a lower APR can save you money. But, it’s important to do the math before making the switch. Many cards that offer an introductory 0 percent APR will also charge a balance transfer fee. Typically, this fee ranges from 3%-5% of the amount being transferred.

In some cases, the cost of a balance transfer fee could outweigh the savings of shifting to a low interest card. For example, if you have a balance of $10,000 on a card, but you plan on paying this balance off over the course of a year, it may cost you less in interest than if you shift this balance to a card with a 0 percent introductory offer that has a 5 percent balance transfer fee, which will cost you $500 to move. Low interest vs. 0 interest

When it comes to choosing a credit card that offers better terms than what you may currently have, it’s important to make the distinction between low interest cards and ones with an introductory zero percent offer. There are no credit cards that offer 0% interest forever, as the definition of a credit card is a card that lets you pay off a balance over time in exchange for accruing interest on the amount of debt you’re carrying. If you want a truly interest free piece of plastic in your wallet, you’d be better off with a charge card which doesn’t carry any interest charges but you have to pay the balance in full every month. Or consider just using a debit card, which subtracts the amount of your purchase directly from your bank account. Keep in mind that using a debit card won’t help you build a strong credit score as transactions on a debit card are not reported to the big three credit reporting agencies. How to choose the right low interest card for your situation

No one sets out to carry a balance on their credit card. The interest is extremely high and your balance can quickly get away from you. However, 38% of households in the U.S. have revolving credit card debt, according to the National Foundation for Credit Counseling’s annual Financial Literacy Surveys. There are many reasons that people fall into credit card debt, and it’s usually due to an unforeseen event or emergency situation such as getting laid off from work or dealing with a medical expense.

In general, if you typically carry a balance — or know that there is a good chance you might have to carry a balance in the future — it’s probably best to choose a card that has a low APR over one with an introductory 0 percent offer, as once the offer expires, the variable APR is likely to be higher than that of a card that has a consistently a low interest rate.

For anyone looking for a card that will help you spread the cost of a large purchase and pay it off over time, a card with an introductory 0 percent offer makes sense, especially if you find a card that has some lasting value to you after the welcome offer. Again, make sure to pay off your balance before the introductory period ends, or at least ensure that the variable APR rate after the intro period is favorable. More reviews and research