Best Low Interest Credit Cards of 2016

Dec 06, 2016 | 19 Comments

low interest credit cards

When it comes to interest rates on credit cards, lower is always oetter. The higher your interest rate, the more money you're at risk of owing if your balance grows out of control.fa

Unfortunately, credit cards aren't exactly known for low interest rates. But that doesn't mean a low interest rate credit card is impossible to find. Quite the opposite.

There are many low interest credit card options out there. These can range from balance transfer cards that offer 0% APR for a period of time up to cards with 10% purchase rates. The card you decide on ultimately will depend on what you need the most for your finances right now.

So how can you find these options and pick the best one for you? With our help! We've scoured the web to find out which are the best low interest rate credit cards out there. Check out our list below to see if any might work for you.

1. The Best 0% APR Balance Transfer Card to Pay Off Debt

Chase Slate® is the Best Option to Consolidate Debt

If you're looking to consolidate your debt, the Chase Slate® credit card is a great option. With this card, you can get 0% interest on purchases and balance transfers for 18 months. And if you make your balance transfer within the first 60 days, you get it for no fee.

With 18 months at no interest, you have a year and a half to put payments down on your debt that go straight to the balance. That's a great way to chip away at large credit card debt.

How Interest Charges Keep You in Debt

With credit cards, interest is the culprit that holds you in debt. If you didn’t have those ever-mounting charges, you'd be able to pay down the balance faster. Credit cards that offer temporary 0% APR introductory periods can be used for balance transfers. That means you can move your debt from one credit card to another to pay it off faster. These introductory periods usually range anywhere from 6-24 months.

Unlike purchases, balance transfers can accrue interest immediately. That's in addition to a fee of up to 3% of the transferred amount. Some cards waive this fee during an introductory period, while a rare few such as Chase Slate® waive balance transfer fees altogether.

Credit Scores Needed for a Balance Transfer Credit Card

The ideal card for debt payoff would have a 0% APR introductory period and no balance transfer fee. This type of balance transfer credit card tends to require relatively good credit. A good credit score, as determined by FICO ranges from 700 to 749 out of 850.

Good credit does not mean an absence of debt. If you have not defaulted on any loans, you can still score well. Even carrying large amounts of debt load won't hurt your chances of approval. Keep your credit usage to less than 30% of your total credit card limit to keep your credit score high.

Balance transfers can be initiated as soon as you qualify for the new credit card. The actual transfer takes 7 to 10 business days to complete. To ensure maximum effectiveness of a balance transfer, you should avoid making new purchases or cash advances on the credit card. Those will not only come at a different interest rate than the transfer, they can also cause you to grow the balance you're trying to shrink.

Balance transfers can be used to consolidate other kinds of debt (e.g., student loans, personal loans, etc.) in addition to credit card balances. Card issuers may occasionally send balance transfer checks that can be used to pay off other debt with your card. (These will still be subject to the 3% fee, which could negate the benefits of a balance transfer). Theoretically, you can continue to roll over your debt to new credit cards with balance transfers again and again. Some people do this to extend the period of time they have to repay the debt at a lower interest rate.

If you're thinking of a balance transfer, keep one thing in mind. Some cards will charge the new rate retroactively on your remaining balance when the introductory rate expires. This could cost you big on the progress you made paying off the balance up until that point. Therefore, if you know you'll need another balance transfer, take care of it before that introductory rate officially expires.

2. The Best Cards for Excellent Credit Scores

Simmons Bank Visa® Platinum for the lowest APR

There is one credit card at least that offers no balance transfer fees and has a low purchase interest rate. Plus, there's no annual fee. That's the Simmons Bank Visa® Platinum card.

But you should note, Simmons Bank only accepts applicants with excellent credit. (For example, a score of 750 or higher.) For some, it may take a few years of working on their credit to qualify for this card.

Rules that Affect Credit Card APRs

Although there are no federal laws limiting credit card interest rates, state laws might cap these rates. Generally, you won’t find a credit card with an interest rate higher than 29.99%. That also happens to be the rate commonly used as the penalty APR. The penalty APR is the new (higher) rate you would get if you miss a payment or exceed your credit limit.

Under federal law, credit card companies must show the card’s APR on its terms and conditions. Card applicants with high credit scores tend to qualify for the lower end of the APR range.

Low APR credit cards may charge less interest, but they don’t usually offer rewards. Great rewards credit cards will have programs that offer cash back, points, and miles, but their APRs will be a little higher. If rewards is mainly what you're looking for, this is something to consider.

3. The Best Card for Bad Credit Scores

First Progress Platinum Prestige MasterCard® Has a Low APR on a Secured Card

If you don't have outstanding credit and want a low interest credit card, there is a great option for you. That's The First Progress Platinum Prestige MasterCard® Secured Card.

This is a secured card and therefore doesn’t require outstanding credit. And it offers a respectable APR of 11.99%, lower than most other secured credit cards. It does, however, come with an annual fee of $44. This is not uncommon for a secured credit card.

Secured Credit Cards with Low Interest Rates for Bad Credit 

The alternative for people with bad credit is a secured credit card. The type of credit card represented by First Progress Platinum Prestige MasterCard® can be used for purchases in the same way as any other regular credit card. The only difference is this card (and all secured cards) requires a security deposit as collateral. Normally, the amount of the security deposit is the amount of the card’s credit limit. Your credit limit, in addition to all activity with the secured credit card, is reported to the credit bureaus. If you practice positive credit behavior, this will help you build or repair your credit.

Qualifications for secured credit cards are less reliant on your credit score. Indeed, your credit report may not even be pulled in your evaluation for these cards. After 6-12 months of having any credit card, you could call your bank to negotiate a lower APR. As long as you've shown responsible usage of the card along with on-time payments, this could work. Card issuers are more likely to decrease your interest rate if your credit score has improved since you got the card.

How Credit Card Interest is Calculated

Percentage of Monthly Credit Card Payments Toward Interest

Scenario A1 A2 A3 B1 B2 B3 C1 C2 C3
Balance $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 $5,000 $5,000 $5,000
APR 16.99% 16.99% 16.99% 16.99% 16.99% 16.99% 8.99% 8.99% 8.99%
Monthly payment $200 $500 $800 $200 $500 $800 $200 $500 $800
Time to pay off 2 years 8 months 11 months 7 months 7 years 4 months 2 years 1 year 2 months 2 years 4 months 11 months 7 months
Total principal paid $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 $5,000 $5,000 $5,000
Total interest paid $1,215 $430 $274 $7,508 $1,841 $1,084 $557 $217 $141
Portion of monthly payment paid toward prinicipal 80% 92% 95% 57% 84% 90% 90% 96% 97%
Portion of monthly payment paid toward interest 20% 8% 5% 43% 16% 10% 10% 4% 3%
Total paid $6,215 $5,430 $5,274 $17,508 $11,841 $11,084 $5,557 $5,217 $5,141
Monthly payment to pay off in 1/2 the time $351 $875 $1,295 $307 $988 $1,511 $378 $855 $1,273

Even the lowest APRs on credit cards may appear high compared to the interest rates on other types of loans. The reason is because credit cards are not tied to any form of collateral. (Unlike the homes and vehicles that are financed by mortgages and car loans that can be taken by the bank in case of default).

The APR for your credit card can vary depending on your credit score. The higher your credit score, the lower your interest rates.

It should also be noted the credit card interest rate that you end up with is calculated by the card company’s own formula. Most commonly, card companies start with The Wall Street Journal's Prime Rate. Then, depending on your creditworthiness, card issuers adds a certain percentage to that rate. The riskier you are as a borrower, the larger the amount that is added to the Prime Rate.

Using Your Credit Card to Improve Your Credit Score

Bad credit, excellent credit, no credit or digging out of debt. Opening one of the above credit cards can be a perfect opportunity to building your credit. Keep some of these tips in mind:

1. Use Credit Cards like Debit Cards

Naturally, debit cards and credit cards differ in one basic way. With the former, you’re spending money you already have in your checking account. For the latter, the money you spend is not yours; it’s borrowed and must be repaid. The difference between how the two card types work is what causes credit card debt to get out of control. Sometimes, people forget how much they’ve charged to their credit card.

One solution is to treat your credit card as you would a debit card. Before swiping your credit card, ask yourself one question. “Would I be able to afford this purchase on my debit card without going overdraft?” Make a habit of this, and it keeps your credit card balance low, and easier to pay off. It also maintains a low credit-to-debt ratio. Each of these things reflects positively on your credit report.

2. Make Smaller “Micropayments” Each Month

There doesn’t have to be an all-or-nothing approach to paying off your credit card bill. Paying it off in full each due date is recommended. Making partial, late, or zero payments isn’t ideal. One way to make your balance work to the benefit of your credit is to make smaller payments throughout the month. These payments (also called micropayments), can lower your debt utilization ratio. At the same time, they keep a healthy amount of active credit on your card.

This will also show up on your report as evidence that you’re using your credit card responsibly. Time your payments so that you’ve paid off your full balance by the end of the billing cycle.

3. Ask for More Credit

Asking for a higher credit line does not necessarily result in more debt. While you’ll always want to keep your debt utilization on the lower end, increasing your credit limit can help boost your credit score. That's because it shows your credit card provider that you can manage a higher balance. Plus, those low-interest rates stay where they are.

However, if you request an increase, the application process includes a hard check to your credit. This can ding your score - not a good idea if your credit is low. If you’re confident that it’s in good shape, go for the higher credit limit. The good thing about it is that it not only can boost your credit, you’re not obligated to utilize all of it.

4. Be Predictable

Don’t go overboard with too many changes to your credit profile. Opening too many accounts or asking for too much credit may make you look like a risky borrower to your lender.

Keep things predictable. While you shouldn’t open too many new accounts, don’t close any old ones. Also, don’t use one credit card only and neglect the others. Instead, find an even balance between all your accounts. Despite the attractive interest rates and bonuses built into the cards above, it’s unwise to sign up, get your perks, and close out your card. That can make a bad impression on your card provider, but also your credit.

Credit Cards for Low Interest

Best Low Interest Credit Cards Notable Feature Who It's Best For
Chase Slate® Introductory offer tends to include 0% APR on balance transfers for an extended period of time. Also, balance transfer fees are waived during the first 60 days People who are trying to pay down their high-interest debt quickly through the use of debt consolidation.
Simmons Bank Visa® Platinum An extremely low regular APR. People want to minimize their interest charges and don't care about rewards.
First Progress Platinum Prestige Low APR for a secured credit card. People with bad credit who might carry a balance occasionally.
BankAmericard for Students Simple credit card with a long 0% intro APR period. Students who want a simple, no-frills credit card to learn responsibly credit card usage.

Did you enjoy this article? Yes No
Oops! What was wrong? Please let us know.

Ask a Question

MyBankTracker
Wednesday, 06 Jul 2016 4:18 PM
<p>Yes, unless the credit card issuer says that there is no credit check, your credit reports will most likely be pulled during the approval process.</p>
MyBankTracker
Wednesday, 06 Jul 2016 4:13 PM
<p>angira, for your credit score range, you might consider the Barclaycard Ring MasterCard, which has an extremely low ongoing APR. Additionally, it doesn't ever charge balance transfer fees.</p>
Tuesday, 05 Jul 2016 7:34 PM
<p>Does no interest credit cards require hard credit score pull?</p>
Tuesday, 05 Jul 2016 7:18 PM
<p>Hello, I'm looking for low interest credit card that has the lowest ongoing APR, my credit score is 680.</p>
MyBankTracker
Monday, 02 May 2016 5:02 AM
<p>Ana, someone who has no credit is not considered the same type of borrower as someone who had bad credit card.</p><p>You are correct that the First Progress Platinum Prestige Secured Card does not have a rewards program.</p>
disqus_IYKrUxW1Xy
Thursday, 28 Apr 2016 6:47 PM
<p>I'm looking at various cards, for myself and my sister who just started college. And as she has no credit to speak of, I'm assuming her credit would be considered "bad"? According to this, the First Progress Platinum Prestige Secured Card does not offer any kind of user rewards, correct?</p>
MyBankTracker
Friday, 22 Apr 2016 4:00 PM
<p>Brenda, that's great news! How soon did you start to see improvements in your credit? Care to share how much your credit scores increased? Thanks!</p>
Friday, 22 Apr 2016 2:42 PM
<p>When we got out of our bankruptcy last year, we wanted to start rebuilding our credit ASAP, and signed up for the First Progress Platinum Prestige Secured Card. Very happy with this card, and we've had already had some bump ups in our credit, due to us paying our balances off quickly. Hopefully we can get an excellent rating sooner rather than later.</p>
MyBankTracker
Tuesday, 19 Apr 2016 10:31 PM
<p>To suggest the best card for you, can you share what you plan on doing with this 0% APR credit card? Is it for debt consolidation, a major purchase, or something else?</p>
MyBankTracker
Tuesday, 19 Apr 2016 10:04 PM
<p>Katie, your chances of being approved for the Chase Slate card will depend more on your credit scores, income and housing expenses. You shouldn't worry too much about opening a Chase checking account first.</p>
Tuesday, 19 Apr 2016 2:04 PM
<p>Hi I'm a Capital One bank customer, I'm looking for zero interest credit cards, any suggestions? Thanks!</p>
Tuesday, 19 Apr 2016 1:24 AM
<p>Hey Katie, I had same idea in the past, but it did not make any difference, I think it only matters when you are a private client and they can take a look at your all financials.</p>
Monday, 18 Apr 2016 9:53 PM
<p>Hi I'm not a Chase customer, but I would like to apply for Chase slate credit card - does it make any difference in application process if I would open a checking account with them first?</p>
MyBankTracker
Sunday, 17 Apr 2016 2:42 PM
<p>Mike, ideally, the card you want will have a combination of free balance transfers and a low APR -- not just one of them. If you're focused on eliminating debt in the near future, a balance transfer credit card with 0% APR is better. Otherwise, if you expect to carry a balance on a regular basis in the long run, a low-interest credit card is likely the better option.</p>
Saturday, 16 Apr 2016 8:07 PM
<p>Hi, I'm looking for low interest rate credit cards for balance transfer, should specifically for balance transfer credit cards or low interest is okay too?</p>
MyBankTracker
Wednesday, 06 Apr 2016 2:45 PM
<p>Trevor, to see more low interest rate credit cards, you can use our card comparison tool: <a href="https://www.mybanktracker.com/credit-cards/compare" rel="nofollow noopener">https://www.mybanktracker.com/...</a>. Just check off the "Low APR" filter.</p>
MyBankTracker
Wednesday, 06 Apr 2016 2:43 PM
<p>Jean, for the purpose of rebuilding credit, the First Progress Platinum Secured Credit Card is good choice if you expect to carry a balance because it has a very low interest rate for a secured credit card. Otherwise, you can look at our choices for the Best Secured Credit Cards for more suitable options: <a href="https://www.mybanktracker.com/credit-cards/secured/best" rel="nofollow noopener">https://www.mybanktracker.com/...</a>.</p>
Wednesday, 06 Apr 2016 12:45 PM
<p>I'd like to compare more - where else can I find more credit cards with low interest rates?</p>
Wednesday, 06 Apr 2016 12:41 PM
<p>What is the best for me with poor credit and trying to rebuild credit?</p>