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What is a low interest rate credit card?

A low rate credit card is a type of credit card that has a low interest rate on purchases. This could help you save money if you don’t pay off your credit card balance in full each month.

Low interest rate credit cards are generally ‘no frills’ and may not include rewards programs, perks and bonuses that premium cards may offer.

Pros and cons of low rate credit cards

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

Potential advantages of using a low rate credit card:

  • You will pay less interest compared to a higher rate card.
  • Some low rate cards may also come with low fees, which could help you save on ongoing costs.

Potential disadvantages of using a low rate credit card:

  • Low rate cards generally do not offer rewards programs.
  • Low rate cards typically also do not offer other features and perks, such as complimentary travel insurance.

How to compare low rate credit cards?

When searching for a low rate credit card, there are a a few factors that could be worth keeping in mind, including:

  • Purchase rate: Look for a low purchase rate. If your card has a 0% purchase rate or low purchase rate for an introductory period, check what the revert rate is.
  • Interest-free days: This is the maximum number of days that you won’t pay interest on new purchases, provided you pay off your closing balance in full each month. So you may want to look for a card with a long interest-free period to give you more time to repay your purchases.
  • Fees: Check the fees, including annual fees, late payment fees, balance transfer fees, cash advance fees and international transaction fees.
  • Features: Check whether the card offers any features such as rewards programs or complimentary insurances.

Frequently Asked Questions about Low Rate Credit Cards

Low rate credit cards are generally suited to people who want to save on interest costs and may not pay their balance off in full each month. Most credit cards come with interest-free periods, such as up to 44 or 55 days, so long as you pay off your balance in full each month. That means you’ll typically be charged interest if you only make the minimum repayment or carry a balance on your card. A low interest rate card could help reduce the interest you are charged.

There are generally two types of 0% credit cards:

  • introductory rate: Those that offer 0% interest on purchases for an introductory period. But this rate will only apply for a limited time, such as the first 12 months, before switching to a higher purchase rate.
  • lifetime: A handful of providers also offer lifetime 0% interest credit cards. Instead of charging interest, they typically charge a monthly fee if you use the card or carry a balance. These cards were originally introduced to rival buy now pay later providers.

Credit card affordability can depend on a few different factors, including how you use your credit card. To keep costs down, you might also want to look for a card with a $0 annual fee. You can compare credit card rates, fees and features using the table at the top of this page.

The ‘best’ credit card for you will depend on the type of credit card you want, as well as your own financial situation. As a place to start, you could consider ratings by comparison sites such as Canstar. Our Star Ratings methodology is used to compare a wide range of credit card products in Australia, covering low cost, rewards and frequent flyer cards. Credit cards are given a rating from one to five stars in each category, with 5-Star Ratings given to products in the top 10% of eligible products on our database. Star Ratings could be used to create a short list of products for you to consider.

Credit card interest rates can vary widely. A review of credit cards on Canstar’s database shows that there can be a huge difference between the highest rate and the lowest rate on offer, so it could be worth shopping around to find the best rate. To find the rates on offer, use the table at the top of the page to display the credit cards listed on Canstar’s database, and then sort them by ‘Purchase rate’.

The interest-free period is the maximum number of days that you won’t be charged interest on purchases. It applies so long as you pay off your balance in full by the due date. Interest-free periods are usually up to 44 or 55 days.

Canstar Credit Card Star Ratings and Awards

Looking for an award-winning credit card product or to switch providers or brands? Canstar rates products based on price and features in our Credit Card Star Ratings and Awards. Our expert Research team shares insights about which products offer 5-Star value and which providers offer outstanding value overall.

Canstar rates a range of financial products, covering banking, insurance and investment. We also reveal which providers have the most satisfied customers in our dedicated Customer Satisfaction Awards.

Credit Card Star Ratings and Awards

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This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.

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The Credit Cards Star Ratings are updated daily based on product features at that date, except for the Overseas Travel profile which is updated annually. Current rates, product features and fees are displayed and may be different to what was rated. The results don’t include every provider in the market and we may not compare all features relevant to you. You can find a description of the initial sort order below the table. Depending on which card feature/use you are looking at, the results will be sorted as follows:

  • Low fee is sorted by Star Ratings, then lowest Annual Fee, then alphabetically by brand.
  • Rewards is sorted by Star Ratings, then lowest Annual Fee, then alphabetically by brand.
  • Frequent Flyer is sorted by Star Ratings, then highest airline points per dollar, then alphabetically by brand.
  • Balance Transfer is sorted by Star Ratings, then lowest balance transfer rate, then lowest rate for the longest period, then lowest revert rate, then lowest upfront fee, and then alphabetically by brand. Please note that Balance Transfer Star Ratings are not for balance transfer suitability but are instead based on the Low Rate profile. 
  • All card types is sorted by highest Points per dollar spent, then lowest Annual fee, then alphabetically by brand.
  • Overseas Travel is sorted by Star Ratings, then lowest currency conversion on purchases, then lowest annual fee.

 

You can use the sort buttons at the top of each column to re-order the display. Learn more about our Credit Cards Star Rating Methodology and our Travel Credit Card and Travel Debit Card Star Ratings Methodology. The Occasional Overseas Traveller rating is shown in the table. The rating shown is only one factor to take into account when considering products. 

The products and Star Ratings in the table might not match your exact inputs in the selector. Sometimes the methodology uses profiles with categories or bands (e.g. income, loan amount or monthly spend), but sometimes a single methodology, without any categories or bands, is applied. The results will show the products that most closely match your selection, based on our profiles. If you are unsure about any terms used in the comparison table please refer to the glossary.

What is a Target Market Determination?

A Target Market Determination (‘TMD’) is a document that explains which people particular financial products may be suitable for (the target market) and sets out any conditions around how financial products can be distributed to consumers.

Why do product issuers provide Target Market Determinations?

From 5 October 2021, TMDs are compulsory for most financial products.

Issuers and distributors of financial products must take reasonable steps that are likely to result in financial products reaching consumers in the target market defined by the product issuer.

We recommend that you consider the TMD before making a purchase decision. Contact the product issuer directly for a copy of the TMD.

Any advice on this page is general and has not taken into account your objectives, financial situation or needs. Consider whether this general financial advice is right for your personal circumstances. Canstar provides information about credit products. We’re not suggesting or recommending a particular credit product for you. If you decide to apply for a Credit Card, you will deal directly with the provider, not with Canstar. It’s important you check rates and product information directly with the provider. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. For more information, read our Detailed Disclosure.

Before you elect to terminate or modify existing lending arrangements, it is recommended that you consider all associated fees and application costs, as well as the timing and impact these changes could have on your wider financial arrangements and personal circumstances.