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Low interest credit cards are useful for any individual who might need to carry a balance over time (the interest rate may not be so important for those who pay their balances in full every month). If you know you need (or might need) to charge an amount that you can’t immediately pay off, a low interest credit card can help you save money in interest on those purchases.

About Low Interest Credit Cards

About low interest credit cards

A low interest credit card is one with a below-average Annual Percentage Rate (APR), generally speaking. Cards that come with a temporary 0% introductory APR can be considered low interest during that time, but not after the regular APR kicks in. Sometimes, card issuers offer fewer benefits and rewards on cards with very low interest rates.
In today’s credit card market, most consumers may consider an APR below 11% or 12% to be favorable, and an APR under 10% to be low.
How low interest credit cards save you money

Low interest credit cards save you money by charging less interest each month than comparable cards with higher interest rates. If you owe $5,000 on a card with a 14.99% APR and you pay $200 a month towards the balance, it’ll take 31 months to pay it off and cost just over $1,000 in interest. If the APR is 8.99% and you make the same $200 monthly payment, you trim three months off the payoff time and save nearly $500 in interest.
How are APRs set?

The credit card company determines the APR range for each credit product it offers. Credit card issuers often set different rates that apply to different types of transactions and different circumstances. For example, various APRs for a promotional purchase or introductory period, regular purchases, balance transfers and cash advances. Some card issuers also impose a higher penalty APR if you miss a payment.
A fixed APR, like the interest rate on an installment loan, does not change. Variable APRs are more common for credit cards. This rate is typically tied to the U.S. Prime rate (the overnight rate banks charge each other). For instance, if the Prime rate is 3.75% and the bank adds a margin range of 5.74% to 8.74% to the variable purchase APR, the variable purchase APR range would be 9.49% to 12.49%. As the Prime rate fluctuates so does the APR on your card.
The APR set for your account is based on your creditworthiness and other factors (which includes your credit rating/credit score). The better your credit score, the better your chances to be eligible for a lower APR (within the range set for the card). On the flip side, a lower credit score typically means a higher rate.
Low interest credit cards pros & cons

The main benefit to low interest credit cards for balance transfers or purchases is the potential to save money over time.
A major drawback of low interest cards is that the lowest interest rate is often promotional and does not last for the entire time you own the account.
Another drawback is that many of the lowest interest rate credit cards have no rewards program or perks.

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