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How to choose the best low rate credit card

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Thinking about applying for a new credit card? Whether you have had many credit cards before or this is your first one, it can be difficult to pick one unless you know exactly why you need it. But one thing remains the same with all credit cards. Namely, how big is the interest rate?

This gives you an indication exactly how much or how little you will pay on top of the amount you spend, and in turn can show you if a particular credit card is adequate for your purposes.

If having a low rate of interest is high on your list of requirements, then a low rate credit card (or low APR credit card) might be the best option for you. Choosing the right one can be tricky though, so read on to find out some appropriate wisdom surrounding low rate credit cards.

What is a low rate credit card?

A low rate credit card comes with an interest rate as low as 4-8%, which stays the same for the lifetime of the card.

It is different to other types of card like a 0% balance transfer card or 0% purchase card, in that the low rate of interest isn’t limited to a short amount of time. On more common credit cards you’re likely to find that even if you do get a low rate of interest or 0% interest, it will only last for a set period before shooting up to a standard rate.

The advantage of a low rate card is being able to rely on the low interest across a long period of time, and is normally only reserved for those with an excellent credit rating. If you’re a bit unsure about your credit rating, you can always unlock your credit report here.

Why should I choose a low rate credit card?

Whilst many credit card customers might prefer the perks surrounding more common cards, a low rate credit card is ideal for those who pride the interest rate above all else. It doesn’t usually come with anything additional as the main benefit is not being charged a large amount of interest for the lifetime of the card.

If you’re keen to have a credit card but aren’t interested in the limited perks available on other cards, a low rate credit card might be ideal for your purposes.

Supplying a low APR credit card actually counts as a risk for the card provider, meaning that they would insist upon having a customer with a solid credit rating and a clear financial history. The risk comes from the low rate being given out for as long as the customer needs, whilst others with a worse credit history will only have access to that rate for a short time.

If you have a good credit history and have always made repayments on time, access to a low rate credit card might benefit in the long term for general everyday usage.

What to look for in a low rate credit card

  • APR – the Annual Percentage Rate is the most important aspect of your low rate credit card, indicating what you might be paying in interest on top of your purchases. The rate is variable, but it will remain consistently low for the lifetime of the card
  • Balance transfer fee – does your low rate card include a balance transfer fee? Often there will be no fee, but there will be interest added, normally at the same as your APR
  • Purchase rate – will often be the same as your APR and balance transfer rate and charged every time you make a purchase
  • Annual fee – some, but not many low rate cards will have an annual fee you will have to pay for the privilege of owning the card
  • Credit limit – this will indicate the amount you’re able to borrow. It’s likely to be higher depending on how trustworthy you appear to card providers in your credit report

Am I eligible to apply for a low rate credit card?

No matter what credit card you might be applying for, it’s important to check your credit score to find out whether you’re eligible to apply. Applying and then being rejected can negatively affect your score even further, stopping you from applying for financial products in the future.

You often need to have an excellent credit score to be accepted for a low rate card, mainly due to the fact that it is a low rate being offered over a long period. If you’re seen as trustworthy to card providers, you shouldn’t have an issue, but a poor financial history can leave you ineligible.

Alternatively, you might be accepted by the card provider but at a higher interest rate than advertised. This is simply a reflection of your financial history as seen by the provider.

Improve your credit rating with these following tips:

  • Electoral register – if you aren’t already, get on the electoral register. You will be seen as more trustworthy by card providers since you are linked to a permanent address
  • Disassociate yourself from other people and addresses – if you have been linked to an ex-partner, friend or family member through a bank account or other financial product in the past, their bad credit rating might impact yours. It can also be the same for an old address. Get in touch with the credit reference agencies (Equifax, Experian and CallCredit) to disassociate yourself from them
  • Overpay on your current debt – try and overpay on any outstanding debt. This will indicate you’re in a good position to be paying off your current debt and perhaps taking on an additional credit card
  • Make your current repayments on time – ensure that any repayments on cards or loans you currently have are made on time every month and are never late. You will be seen as much more reliable by card providers
  • Apply less frequently – if you have already been rejected multiple times when when applying for a low rate card, try and leave it for a longer period before applying again. Multiple failed applications in a short space of time can negatively impact your credit score
  • Credit builder – if you know you have a poor credit score and are looking to improve, perhaps try a credit builder card instead? By keeping up with monthly repayments it will slowly improve your score and allow you to apply for a low rate card in the future

What’s next?

If you have checked your credit report or have had one recently, you may now know if you’re eligible to apply or not. So what’s it to be?

  • Yes, I am eligible to apply

If you are eligible to apply for a low rate credit card, happy hunting! Browse our low rate credit cards or find the perfect one for you with our moneymatcher comparison tool. It takes a few personal details and conjures up the best credit cards for you. All without affecting your credit score.

Compare Low Rate Cards

  • No, I’m not eligible to apply

If you aren’t eligible to apply for a low rate card, not to worry. There are plenty of other credit card options to choose from that might actually suit you a lot better.

Browse our credit cards now, or try our free moneymatcher comparison tool, which will deliver personalised recommendations based on a few personal details, all while keeping your credit score intact.

Robert Bester - Content Writer

Updated on 3rd June 2019