Compare Low Interest Credit Cards - Australia

When you’re wary of credit card debt a card with a low-interest rate could be an attractive option. But due to their incredible popularity, there are a huge number of options to choose from. So much so, that choosing a credit card can feel like a bit of a minefield.

We believe everyone should be able to confidently choose a suitable credit card if they want one, so we’ve put together this easy-to-follow guide to assist you to compare low-interest-rate credit cards with information to help make a wise choice.

To make the credit card decision process simpler for you, we’re going to walk you through some things to know about low-interest rate credit cards.

A low interest rate credit card is any credit card that charges a lower than average interest rate on purchases. This is often called the purchase rate, which differs from the cash advance rate (the interest rate charged when you withdraw cash from your credit card) and the balance transfer rate (the interest rate charged when you transfer your debt from another credit card).

A low interest rate credit card usually has a low purchase rate and higher cash advance and balance transfer rates. In fact, most credit cards generally have a higher cash advance rate, which could be because lenders may consider cash advances to be riskier than standard purchases. Dedicated balance transfer cards often offer low interest rates on the debt you transfer across, but typically charge a higher interest rate when you take on new debt by making purchases directly on the balance transfer card.

Low interest rate credit cards can have other perks, such as a rewards program. Some low interest cards have annual fees and some don’t.

Low interest rate credit cards work just like any other credit card. You’ll be granted a line of credit, which you can use to buy products and services. Most cards will include an interest-free period, which means you’ll be expected to pay off your balance (pay back any credit you spend) by the due date. If you don’t, you’ll be charged interest. The difference is that the interest charged will be lower than for cards with higher interest rates.

Because they have a low interest rate, the other fees associated with these kinds of credit cards may be higher. As an example, a balance transfer fee may apply when you transfer an existing credit card debt to a low interest rate credit card. So always check the terms and conditions before you apply for and use a credit card.

One of the most common questions about these kinds of credit cards is ‘how much could I save with a low interest rate credit card?’. This answer will vary a lot depending on your spending habits, how easily and quickly you can repay your debts, and the other fees associated with the card.

As an example, if you regularly carry forward a balance, making only the minimum monthly repayments, and switch to a credit card that charges half the interest rate of your current card, you might save roughly half your interest fees. However, you may pay a higher annual fee or other fees that you don’t have with your current card which could impact these savings.

There might be other considerations, such as rewards, like those available through the Visa card perks program or Mastercard perks program, if they’re not already available through your current card.

On the other hand, if you always pay off your balance in full before the due date, you might not save with a lower interest rate.

A great way to help estimate how much you could save with a low interest rate credit card is to look at your statements from the last 12 months and calculate how much interest and other fees you would have paid if you had used a credit card with a lower purchase rate.

Start by listing out all the fees charged by the card you’re considering. Then find all the items on your statements that relate to those fees and do the relevant calculations.

Just remember, some cards may charge fees not charged by your current card and vice versa, so you can’t just match the fees listed on your statement.
This can get quite complicated, as you may have to calculate discounts on individual transactions rather than just on your total spend, so you might need a financial adviser to help you.

A best low interest rate credit card doesn’t exist. Like everything, it’s a good idea to make a financial decision based on what makes the most sense for your personal circumstances.

Having said that, we’ve put together a really easy-to-use guide that will help you compare credit cards. By adding the following questions to that guide, you’ll have some tools to help you compare low-interest-rate credit cards and choose a card that’s suitable for you.

• Why do you want a low interest rate? You might decide that getting the lowest interest rate on purchases might be your most important comparison criteria. However, you might find a long interest-free period is more valuable for your situation. There can be other important considerations such as additional perks, the balance transfer rate and other fees such as the annual fee.

• What will you be buying with your card most often? If there are patterns to the type of purchases you make, there may be a low interest rate credit card that also offers rewards for certain eligible purchases.

At first glance, it sometimes seems like the best low interest rate credit cards are the ones that have the lowest interest rates. But with other fees, discounts and perks, the situation is far from clear-cut. By combining the tips in our main credit card comparison guide with the questions on this page, you’ll have tools to help you compare a range of low interest rate credit cards, ensuring you check what is relevant to your needs and situation.