A low rate credit card will have low, or no, ongoing fees. Compare low rate credit cards to find an offer that suits you. Consider the purpose of your credit card and what features are important to you before you decide.
Important disclosure
Purchase Rate
11.80%
p.a
Interest Free Days
Annual Fee
$0
$20
Purchase Rate
13.74%
p.a
Interest Free Days
55
Annual Fee
$58
$20
Purchase Rate
13.74%
p.a
Interest Free Days
55
Annual Fee
$0
for 12 months then $58 thereafter
$20
Purchase Rate
10.49%
p.a
Interest Free Days
45
Annual Fee
$0
for 12 months then $48 thereafter
$0
Purchase Rate
10.76%
p.a
Interest Free Days
55
Annual Fee
$0
for 12 months then $30 thereafter
$10
Purchase Rate
11.99%
p.a
Interest Free Days
55
Annual Fee
$0
$8
Purchase Rate
4.99%
p.a
for up to 5 months, then 12.84%
Interest Free Days
Annual Fee
$0
$0
Purchase Rate
10.49%
p.a
Interest Free Days
55
Annual Fee
$30
$25
Purchase Rate
13.99%
p.a
Interest Free Days
55
Annual Fee
$55
$15
Arguably the biggest cost of a credit card is the purchase rate. Cardholders who are looking to keep costs down, or always find themselves paying interest each statement period, may want to consider a low rate credit card instead.
Whilst some credit cards focus on offering features including frequent flyer rewards, no annual fee or a 0% balance transfer, a low rate credit card can provide a “no frills” alternative to reduce the interest you pay on purchases.
A low rate credit card is one that charges a lower interest rate than the market average. The average credit card rate generally sits around 15-17 per cent - and this hasn't shifted too much in the last decade.
The lowest rates on the market will vary depending on the lender, but Australians looking to keep costs down will typically aim for a credit card under 12 per cent.
With credit card interest rates typically ranging from around 8-25 per cent, choosing a low rate credit card under 24 per cent at a bare minimum could make a big difference to how high your monthly repayments are.
If you are in the market for a low rate credit card, it’s important to understand the different types of interest rates that can be charged.
Credit card interest is charged daily, based on the amount of debt you owe. The amount of interest you may be charged depends on a range of factors, including:
However, if you pay off your debt in full every month, and do not withdraw cash with your card, you will not be charged interest. This is fundamentally the best way to avoid paying purchase rates or cash advance rates.
Where things can get complex, is in the calculation of interest free periods. A mistake some cardholders make is assuming that their interest-free days start again for every new purchase made. It’s important to remember that your interest is charged according to your billing cycle, not from the first day you make a purchase on the credit card.
Example: How your days interest-free are calculated:
If you only make minimum repayments on your card balance, don’t repay the debt during your interest-free period, or have an outstanding balance at the end of your billing cycle, the lender will charge you interest on your remaining debt.
Similar to a personal loan or a home loan, you are charged interest to pay for the cost of borrowing. However, unlike a personal loan or a home loan, you can avoid paying interest on your credit card by paying off your balance in full every month.
You can also reduce the interest you are charged by choosing a credit card with a lower than average interest rate. This is where low rate credit cards can come in handy.
If you cannot pay off your credit card debt in full, a low rate credit card could be the best option for you. However, if you always clear your balance each statement period, you may be better off with a low fee credit card.
Disciplined savers may find that card fees are the only ongoing cost charged to their card account. Choosing a card with no annual fee, or no foreign transaction fees, for example, can help to make your credit card more affordable.
Low rate credit cards are often recommended as a first credit card for young Australians due to the lower risk of accruing debt than a higher rate card. Alternatively, young Australians may want to weigh up the benefits and risks of alternative access to credit, such as buy now pay later platforms, such as Afterpay or Zip Pay.
Here are some of the benefits and disadvantages of credit cards with low interest rates:
All credit cards come with various features, terms and conditions that you need to check before you decide to apply. You could have the lowest interest rate on the market, but if you're paying through the nose in fees, this may be redundant.
Here are a few things to consider if you’re applying for a low rate credit card.
To view a credit card's T&Cs, hop on to the card provider's website for more information. You can also read the cards Product Disclosure Statement online to learn more about potential ongoing costs, and any eligibility criteria for your application, or eligible purchases for rewards credit cards.
This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.
How to calculate credit card interest
Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.
The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.
This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.
What is the lowest monthly repayment on my credit card?
As a rule of thumb, this tends to be around 2-3 per cent of the outstanding balance. You can choose how much you want to repay each billing period as long as it is higher than this minimum required amount.
Which credit card has the highest annual percentage rate?
The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.
Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:
On this page
