Low Rate Credit Cards: Interest Rates Below 9%

With credit card debt levels in Australia recently hitting a five-year high, consumers looking to shift their balance could consider shopping around for a lower rate card. Some providers now offer interest rates below 9%.

The level of credit card debt held by Australians was also brought into focus recently by a report from the financial services regulator ASIC. It found that nearly 1 in 5 Australian consumers are struggling with credit card debt.

However, the report suggested that these consumers could have saved themselves a collective $621 million in 2016-17 by opting for a low rate card.

With several options on Canstar’s database below the 9% mark, now could be a good time to compare some of the lowest interest rate credit cards on the market.

If you want to learn more about low rate credit cards, how they work and how they can stack up against other kinds of credit cards, read on.

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Low rate credit cards on Canstar

The table below displays a snapshot of low rate credit cards on Canstar’s database, sorted by purchase rate (lowest to highest) then by provider name (A-Z). The results are based on a monthly spend of $1,000 ($12,000 annually).

To see the full list of low rate credit cards on Canstar, click here.

 

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What are low rate credit cards?

Low rate credit cards typically come with lower interest rates than other types of cards, with some on our database as low as 6.64 to 8.99%. According to Canstar Research, the average non-rewards card purchase rate is 13.84%, while the highest is 24.99%. So if you were to take out a card with a purchase interest rate below 9%, you’d be paying 6.84% less interest than the average card. Some cards even offer introductory rates of 0% before switching to a higher rate later on. When deciding on a suitable card, it’s important to consider the rate of interest that would apply over the long term and not just the introductory rate that’s being offered.

Table displays snapshot of 0% introductory offer cards with links to providers’ websites, sorted by provider name (A-Z). Results based on a monthly spend of $1,000. 

In some cases low rate credit cards may be suitable for customers who want to transfer an existing balance to a new card to save on interest, or for those who just want a no-frills product for their everyday transactions.  Using ASIC’s credit card calculator, a $2,000 credit card debt charged at 24.99% interest, while making the minimum monthly repayments, could cost you $6,253 in interest over 23 years.

In contrast, a 6.64% purchase rate for that same debt with minimum repayments would mean you’d pay $553 in interest and more than halve the amount of time taken to clear your balance.

Pros and cons of low rate credit cards

Here are some of the pros and cons of low rate credit cards:

Low rate credit cards: pros and cons

Pros

Cons

  • Lower interest rates can mean lower monthly interest repayments when compared with higher rate credit cards.
  • They can also come with low fees, suitable for those consumers looking for a ‘no frills’ card without premium features.
  • Low rate credit cards can also come with even lower rate balance transfers.
  • Low rate cards tend to not come with rewards programs and so tend not to be suitable for people seeking rewards, although there are exceptions.
  • They typically don’t come with the same perks and bonuses as some premium cards.
  • Some cards come with zero interest-free days – meaning all purchases will incur interest.

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5-Star low rate credit cards

The following low rate credit cards received a 5-Star rating in April 2018:

Company Winning Product
Bank Australia Low Rate Visa Credit Card
Bank First Visa Platinum Credit Card
Bank of us Visa Credit Card
Community First CU Low Rate Black Visa
Community First CU McGrath Pink Visa
Easy Street Fin Services Easy Low Rate Visa
Endeavour Mutual Bank Visa Credit Card
G&C Mutual Bank Low Rate Visa Credit Card
Nexus Mutual Low Rate Platinum Credit Card
Northern Inland CU Low Rate Visa Credit Card
Police Bank Visa Credit Card
SCU Low Rate Visa Credit Card
Teachers Mutual Bank Teachers Credit Card
UniBank Visa Credit Card
Woolworths Employees CU Low Rate Credit Card

Source: Canstar Credit Cards Star Ratings, April 2018.

How to compare low rate credit cards

When searching for a low rate credit card, there a few factors to keep in mind:

  • The purchase rate and revert rate (the rate your card reverts to after any introductory period) on the card
  • The fees, such as annual fees, late payment fees, balance transfer fees etc
  • The perks and bonuses, if any, the card has
  • The promotional interest rate, and how long it lasts for
  • The number of interest-free days – our database shows the maximum for credit cards is currently 62, while a quick search shows that some low rate cards have 0.

To compare these and more when choosing a new credit card, use Canstar’s comparison tables:

Compare Credit Cards with Canstar

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