Low Interest Credit Cards

A low rate credit card makes large balances a little more manageable. If you carry a balance from one month to another, a low interest credit card could be a good choice for you. Browse the best low interest credit card offers from our partners and compare introductory rates, ongoing rates, annual fees, and rewards to find the right card for you.

See the best low interest credit card offers from our partners below.

Summary

CreditCards.com's best rated low interest credit cards of 2018:

Discover it® Cash Back

Discover it® Cash Back

26,257 Reviews

See Rates & Fees

Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Discover's Secure Site

At A Glance

Annual Fee
$0
Balance Transfer Intro APR
0% for 14 months
Regular APR
13.74% - 24.74% variable

See Rates & Fees

Show Less

Highlights

  • Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
  • Earn unlimited 1% cash back on all other purchases – automatically.
  • Intro Offer: Discover will match all the cash back earned at the end of your first year, automatically.
  • Redeem cash back any amount, any time. Rewards never expire.
  • Use your rewards at Amazon.com checkout.
  • Receive Free Social Security number alerts—Discover will monitor thousands of risky websites when you sign up.
  • No annual fee.

Rates & Fees

Annual Fee
$0
Intro Purchase APR
0% for 14 months
Regular APR
13.74% - 24.74% Variable
Intro Balance Transfers APR
0% for 14 months

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NEW - UP TO $100 CREDIT FOR TSA PRE✔® OR GLOBAL ENTRY

Capital One® Venture® Rewards Credit Card

Capital One® Venture® Rewards Credit Card
Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Capital One's Secure Site

At A Glance

Annual Fee
$95, waived first year
Balance Transfer Intro APR
N/A
Regular APR
14.74% - 24.74% variable

Show Less

Highlights

  • Enjoy a one-time bonus of 50,000 miles once you spend $3,000 on purchases within 3 months from account opening, equal to $500 in travel
  • Earn 2X miles on every purchase, every day. Plus earn 10X miles on thousands of hotels; learn more at hotels.com/venture
  • Receive up to $100 application fee credit for Global Entry or TSA Pre✓®
  • Fly any airline, stay at any hotel, anytime
  • Travel when you want with no blackout dates
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • No foreign transaction fees
  • $0 intro annual fee for the first year; $95 after that

Rates & Fees

Annual Fee
$0 intro for first year; $95 after that
Intro Purchase APR
N/A
Regular APR
14.74% - 24.74% (Variable)
Intro Balance Transfers APR
N/A

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Chase Freedom Unlimited®

Chase Freedom Unlimited®

9,632 Reviews

Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Chase's Secure Site

At A Glance

Annual Fee
$0
Balance Transfer Intro APR
0% Intro APR on Balance Transfers for 15 months
Regular APR
16.74% - 25.49% variable

Show Less

Highlights

  • Unlimited 1.5% cash back on every purchase - it's automatic
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.74-25.49%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open
  • Free credit score, updated weekly with Credit Journey℠
  • No annual fee

Rates & Fees

Annual Fee
$0
Intro Purchase APR
0% Intro APR on Purchases for 15 months
Regular APR
16.74% - 25.49% Variable
Intro Balance Transfers APR
0% Intro APR on Balance Transfers for 15 months

View All Card Details

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Chase Freedom®

Chase Freedom®

14,707 Reviews

Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Chase's Secure Site

At A Glance

Annual Fee
$0
Balance Transfer Intro APR
0% Intro APR on Balance Transfers for 15 months
Regular APR
16.74% - 25.49% variable

Show Less

Highlights

  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
  • Enjoy new 5% categories each quarter
  • Unlimited 1% cash back on all other purchases - it's automatic
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.74-25.49%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • Cash Back rewards do not expire as long as your account is open and there is no minimum to redeem for cash back.
  • Free credit score, updated weekly with Credit Journey℠
  • No annual fee

Rates & Fees

Annual Fee
$0
Intro Purchase APR
0% Intro APR on Purchases for 15 months
Regular APR
16.74% - 25.49% Variable
Intro Balance Transfers APR
0% Intro APR on Balance Transfers for 15 months

View All Card Details

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Wells Fargo Platinum Visa® Card

Wells Fargo Platinum Visa® Card
Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Wells Fargo's Secure Site

At A Glance

Annual Fee
$0
Balance Transfer Intro APR
0% for 18 months
Regular APR
16.90% - 26.74% variable

Show Less

Highlights

  • 0% Intro APR for 18 months on purchases and balance transfers, then a 16.90%-26.74% variable APR; balance transfer fees apply
  • Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Platinum Visa® Card
  • Free access to your FICO® Credit Score with Wells Fargo Online®
  • Zero Liability protection for promptly reported unauthorized transactions
  • Convenient tools to help create a budget and manage your spending with My Money Map
  • $0 Annual Fee
  • Select "Apply Now" to learn more about the product features, terms, and conditions

Rates & Fees

Annual Fee
$0
Intro Purchase APR
0% for 18 months
Regular APR
16.90%-26.74% (Variable)
Intro Balance Transfers APR
0% for 18 months

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EXTENDED 0% INTRO APR OFFER

Capital One® Quicksilver® Card - 0% Intro APR for 15 Months

Capital One® Quicksilver® Card - 0% Intro APR for 15 Months
Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Capital One's Secure Site

At A Glance

Annual Fee
$0
Balance Transfer Intro APR
0% intro on balance transfers for 15 months
Regular APR
14.74% - 24.74% variable

Show Less

Highlights

  • One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening
  • Earn unlimited 1.5% cash back on every purchase, every day
  • No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won't expire for the life of the account and there's no limit to how much you can earn
  • 0% intro APR on purchases for 15 months; 14.74%-24.74% variable APR after that
  • 0% intro APR on balance transfers for 15 months; 14.74%-24.74% variable APR after that; 3% fee on the amounts transferred within the first 15 months
  • Pay no annual fee or foreign transaction fees

Rates & Fees

Annual Fee
$0
Intro Purchase APR
0% intro on purchases for 15 months
Regular APR
14.74% - 24.74% (Variable)
Intro Balance Transfers APR
0% intro on balance transfers for 15 months

View All Card Details

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Blue Cash Everyday® Card from American Express

Blue Cash Everyday® Card from American Express

See Rates & Fees , Terms Apply

Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at American Express's Secure Site

At A Glance

Annual Fee
$0
Balance Transfer Intro APR
0% on Balance Transfers for 15 months
Regular APR
14.74% - 25.74% variable

See Rates & Fees , Terms Apply

Show Less

Highlights

  • $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%).
  • 2% cash back at U.S. gas stations and at select U.S. department stores, 1% back on other purchases.
  • Low intro APR: 0% for 15 months on purchases and balance transfers, then a variable rate, currently 14.74% to 25.74%.
  • Over 1.5 million more places in the U.S. started accepting American Express® Cards in 2017.
  • Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
  • No annual fee.
  • Terms Apply.

Rates & Fees

Annual Fee
$0
Intro Purchase APR
0% on Purchases for 15 months
Regular APR
14.74%-25.74% Variable
Intro Balance Transfers APR
0% on Balance Transfers for 15 months

View All Card Details

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Citi® Double Cash Card

Citi® Double Cash Card
Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Citi's Secure Site

At A Glance

Annual Fee
$0*
Balance Transfer Intro APR
0% for 18 months*
Regular APR
15.24% - 25.24% variable

Show Less

Highlights

  • Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay
  • Balance Transfers do not earn cash back
  • 0% Intro APR on Balance Transfers for 18 months. After that, the variable APR will be 15.24% - 25.24% based on your creditworthiness*
  • Click 'Apply Now' to see the applicable balance transfer fee and how making a balance transfer impacts interest on purchases
  • No categories to track, no caps on cash back, no annual fee*

Rates & Fees

Annual Fee
$0*
Intro Purchase APR
N/A
Regular APR
15.24% - 25.24%* (Variable)
Intro Balance Transfers APR
0% for 18 months*

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Wells Fargo Cash Wise Visa® Card

Wells Fargo Cash Wise Visa® Card
Good to Excellent Credit Recommended (670-850) ? CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
at Wells Fargo's Secure Site

At A Glance

Annual Fee
$0
Balance Transfer Intro APR
0% for 12 months
Regular APR
14.74% - 26.74% variable

Show Less

Highlights

  • Earn a $200 cash rewards bonus after spending $1,000 in the first 3 months
  • Earn unlimited 1.5% cash rewards on purchases
  • Enjoy 1.8% cash rewards on qualified mobile wallet purchases, like Apple Pay® or Android Pay™, during the first 12 months from account opening
  • No category restrictions or sign ups and cash rewards don't expire as long as your account remains open
  • Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Cash Wise Visa® Card
  • 0% Intro APR for 12 months on purchases and balance transfers, then a 14.74%-26.74% variable APR; balance transfer fees apply
  • $0 Annual Fee
  • Select "Apply Now" to learn more about the product features, terms, and conditions

Rates & Fees

Annual Fee
$0
Intro Purchase APR
0% for 12 months
Regular APR
14.74%-26.74% (Variable)
Intro Balance Transfers APR
0% for 12 months

View All Card Details

Show More


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Editorial disclosure: All reviews are prepared by CreditCards.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the bank's website for the most current information.


Comparing Low Interest Credit Card Offers

Updated: July 13, 2018

Low interest credit cards – cards under the national average of 16.62% – are helpful if you plan to carry a balance, making a difference in savings in the amount of hundreds of dollars. Although it's usually best to pay off the balance each month, sometimes that isn't possible. That's where low interest cards come in.

If you want to look at how interest rates work on credit cards, look no further. We crunched the numbers on more than 800 credit cards to determine the best credit cards with low interest rates, and also included information on how to best utilize these cards. Here, we look at:

Wondering if you qualify? Want to understand how your score affects your interest rates? We look at that and more.


CreditCards.com's best low APR credit cards

Credit CardBest For:0% Purchase APR PeriodRegular APRCreditCards.com Rating
Capital One® VentureOne® Rewards Credit CardLow variable APR and travel with no annual fee12 months13.74% - 23.74% Variable3.0 / 5
Discover it® Cash BackLow variable APR and online shopping14 months13.74% - 24.74% Variable3.9 / 5
Capital One® Venture® Rewards Credit CardLow variable APR and travel rewardsN/A14.74% - 24.74% Variable4.4 / 5
Chase Freedom Unlimited®Long 0% purchase APR period and flat-rate cash back15 months16.74% - 25.49% Variable2.4 / 5
Chase Freedom®Long 0% purchase APR period and rotating bonus categories15 months16.74% - 25.49% Variable2.5 / 5
Wells Fargo Platinum Visa® CardLong 0% intro APR period for balance transfers18 months16.90% - 26.74% VariableN/A
Capital One® Quicksilver® CardLow balance transfer fee15 months14.74% - 24.74% Variable3.9 / 5
Blue Cash Everyday® Card from American ExpressLong 0% purchase APR period and gas/groceries spending15 months14.74% - 25.74% Variable3.5 / 5
Citi® Double Cash CardLong 0% purchase APR period and no annual fee18 months15.24% - 25.24% Variable4.0 / 5
Wells Fargo Cash Wise Visa® CardLow intro APR and mobile pay12 months14.74% - 26.74% Variable4.6 / 5

Research methodology: how we picked the best cards

Low interest credit cards analyzed: 869

Criteria used: Regular APR, intro APR, other rates and fees, rewards rates, rewards categories, redemption options, miscellaneous features and benefits, customer service, security, credit needed, ease of application

Deeper details: our top picks for the best low interest credit cards

Capital One® VentureOne® Rewards Credit Card

The Capital One VentureOne card has a good 0% intro APR for 12 months on purchases if you need to pay off a big purchase early. After that, the regular APR of 13.74% - 23.74% variable will apply. With no annual fee and decent travel rewards, this card is also one that likely deserves a regular spot in your wallet. You get 1.25 miles for every dollar you spend and a bonus of 20,000 miles if you spend $1,000 in the first 3 months of getting the card. It's also great for hotel bookings, with 10x miles on purchases at hotels.com/venture.

Discover it® Cash Back

With the Discover it Cash Back, you'll get a decent amount of time to pay off an early balance, with a 0% intro APR period of 14 months for both purchases and balance transfers. The regular APR of 13.75% - 24.74% variable isn't too shabby either if you plan on carrying a balance (although we don't recommend it). In terms of rewards, the Cash Back gives you cash back at rotating categories each quarter (up to a maximum spend) each time you activate them. So, if you're diligent about checking what those categories are, you can earn some nice rewards on common purchases. Plus, you can use your rewards at Amazon.com checkout.

Capital One® Venture® Rewards Credit Card

The regular interest rate on the Capital One Venture card is relatively low, starting at 14.74% and going up to 24.74% variable. The Venture card is similar to the VentureOne card in many ways, but offers 2x miles (instead of 1.25x) on all purchases and 30,000 more miles in its welcome offer (50,000 miles total for $3,000 in spend in the first 3 months). Just note - you'll need pretty good credit to qualify for this card.

Chase Freedom Unlimited®

Similar to the Blue Cash Everyday, the Chase Freedom Unlimited card gives you a 15-month 0% intro APR period for both purchases and balance transfers. The regular APR of 16.74% - 25.49% variable is higher than other cards in our list, but the real benefit of this card comes in the intro APR periods and cash back rates. You get 1.5% cash back on every purchase and you can also snag a $150 bonus in the first three months if you spend $500.

Chase Freedom®

The Chase Freedom is the rotating cash back categories version of the Chase Freedom Unlimited. They both have zero interest intro periods of 15 months for purchases and balance transfers, and a go-to APR of 16.74% - 25.49% variable afterward, but the main difference is in the rewards rates. The Chase Freedom is very similar to the Discover it Cash Back - quarterly rotating bonus categories that you have to keep track of, but with a handsome 5% cash back rate.

Wells Fargo Platinum Visa® Card

Need a while to pay off a big purchase? The Wells Fargo Platinum Visa has a nice long 18-month 0% intro APR period where you pay no interest (then 16.90% - 26.74% variable APR) and can take your time paying off the big expense. Other than that, this card is pretty standard without a ton of perks. One that does stand out, however, is its cell phone protection - up to $600 covering damage or theft if you pay your phone bill with this card.

Capital One® Quicksilver® Card

The Capital One Quicksilver competes closely with the Chase Freedom Unlimited, offering similar perks and benefits like no annual fee, a $150 sign-up bonus, and unlimited 1.5% cash back on purchases. The Quicksilver's intro 0% APR period of 15 months is a decent length; thereafter, it features a reasonable regular APR range of 14.74% - 24.74% (variable).

Blue Cash Everyday® Card from American Express

The Blue Cash Everyday card boasts an even larger 0% intro APR of 15 months for both purchases and balance transfers then a variable rate, currently 14.74% to 25.74%. If you spend a lot of money on gas and groceries, this card is a great addition to your wallet. You get 3% cash back at U.S. supermarkets and 2% back at gas stations, all while paying no annual fee.

Citi® Double Cash Card

The Citi Double Cash is among the top tier of flat-rate cash back cards and gives you an eye-opening 0% intro APR on balance transfers for 18 months and then 15.24% - 25.24% variable. Note that balance transfers don't earn cash back though. The rewards rate is pretty simple - 1% when you buy and 1% when you pay your bill each month. All for no annual fee.

Wells Fargo Cash Wise Visa® Card

The Cash Wise card's low intro APR of 0% lasts for a solid 12 months, although there are other cards that offer longer intro periods. However, it is a solid low interest option if you are able to land in the lower end of its regular variable APR range of 14.74% - 26.74%. Besides serving as a low interest option, the Wells Fargo Cash Wise also has one of the larger sign-up bonuses available, with $200 in cash rewards after spending $1,000 in your first 3 months.

Other expert opinions

Ginger Dean, personal finance expert
Favorite low interest card: Citi Diamond Preferred credit card
“Overall, the Citi Diamond Preferred card is the best option because of the generous introductory terms and access to premium features, which gives customers peace of mind and a safety net when making purchases.”

Lisa Gerstner, contributing editor at Kiplinger’s Personal Finance
Favorite low interest card: Citi Diamond Preferred card
“Citi Diamond Preferred stands out from the pack because it gives the cardholder the best shot at paying off a big purchase before interest kicks in.”

Stephanie O'Connell, millennial personal finance expert
Favorite low interest card: U.S. Bank Visa Platinum card
“In addition to the 0-percent introductory APR offer on purchases and balance transfers for 20 billing cycles, the U.S Bank Visa Platinum card has no penalty APR, which can be a particularly attractive feature for consumers who may have difficulty staying on top of their payments and are concerned about racking up additional interest.”

Matt Schulz, senior industry analyst at CreditCards.com
Favorite low interest card: U.S. Bank Visa Platinum card
“When you’re paying down debt, every percentage point counts. That’s what makes the U.S. Bank Visa Platinum card appealing.”

Daniel Ray, editor-in-chief at CreditCards.com
Favorite low interest card: U.S. Bank Visa Platinum card
“If you want to avoid interest like the plague, then the U.S. Bank Visa Platinum card gives you the best odds.”

What is the average interest rate on a credit card?

The national average for credit card interest rates is just over 16.5%, although averages for categories can be considerable lower or higher. For example, low interest is under 13.5%, while bad credit is at almost 24%. Here are the most common categories, with their average rates:

Credit Card CategoryAverage Interest Rate
National Average16.62%
Low Interest13.42%
Business14.30%
Balance Transfer15.83%
Student16.10%
Airline16.57%
Reward16.71%
Cash Back16.90%
Instant Approval18.97%
Bad Credit23.74%

Retail cards are among the highest in interest rates, although they have advantages such as loyalty rewards and they will often require lower credit. Retail cards had an average rate of 24.99% in late 2017, according to a CreditCards.com poll. Store-only cards' rates were even higher, at 26.38%, while co-branded cards were at 22.51%. A co-branded card is typically a card within one of 3 major card networks (Visa, Mastercard, American Express) that also carries the store's logo. But it's the rewards programs that make retail cards competitive.

Even though there are low interest rates to be had, consumers in the U.S. are woefully unaware of the APRs they do have.

In a recent poll by creditcards.com, it was found that 48% of cardholders aren't so sure about the interest rates on their cards, Gen Xers carried a balance on more cards and consumers over 55 were more likely to not carry a balance.

What cardholders know about their interest rates...

  •  24%
  • Carried a balance on at least 3 cards
  •  48%
  • Were unsure or unaware of their cards' APRs
  •  39%
  • Of balance-carrying cardholders knew the interest rate on all of their cards
  •  53%
  • Of women thought they knew or didn't know the interest rate on all their cards
  •  43%
  • Of men thought they knew or didn't know the interest rate on all their cards
  • Source: CreditCards.com poll

What's the difference between interest and APR?

APR, or annual percentage rate, is the cost of credit expressed as an annual percentage. To determine the monthly periodic rate, divide the APR by 12 months, says Chase. To determine a daily periodic rate, divide the APR by 365 days.

"An interest charge is the sum of interest on your credit card account," says Chase, with the interest charge broken down by transaction type, such as purchases, cash advances and balance transfers. "If you pay less than the full balance, pay after the payment due date (or if your credit card does not have an interest free period) then you will pay interest on those purchases. Cash advances and some balance transfers have no interest free period. This means they start accruing interest as soon as the transaction is made. This will result in interest due, even if your balance is paid in full."

How to save money with a low interest credit card

A high interest rate is one of the biggest culprits in attaining card debt. If you owe $3,000 and you are paying a rate of 16.5% APR, then it would take you 124 months to pay the minimum amount, and you would end up paying $2,122 in interest alone.

One of the biggest surprises about card debt, though, is who the debtor is. A CreditCards.com poll found that, surprisingly, consumers with higher incomes were more likely to have debt than those with lower incomes:

Higher income brackets are more likely to carry a balance...

  •  38%
  • Income over $50k
  •  24%
  • Income under $50k

...and for a longer time. After 5 years...

  •  27%
  • Income over $75k
  •  20%
  • Income under $75k

CreditCards.com survey

To avoid that debt, the best thing you can do is to pay in full each month. Also, avoid putting charges on your card that you can't pay in full by the due date. Want that big-screen TV but don't have the cash? Start setting aside the money rather than paying with your card without a plan.

If you're already stuck in debt, you can avoid paying some interest by paying more than the minimum amount. Remember that $3,000 at a 16.5% rate, in which you end up with more than $2,000 in interest charges because you paid the minimum? Well, if you paid $200 a month, those interest charges would drop to $383.

If you pay more than the minimum...

RateMonthly paymentMonths to pay offAmount owedInterest to pay off
16.5%3% or $25, whichever is greater124$3,000$2,122
16.5%$20017$3,000$383

Another way to save money on interest is to transfer an existing balance to a balance transfer card or a low interest card.

With a lower interest rate, and even better, 0% intro APR, you can pay off that card debt at a faster rate. Also, you save hundreds of dollars in interest charges.

Comparing payoff with low interest vs. higher interest...

CardRegular APRRateMonthly paymentMonths to pay offAmount owedInterest to pay off
Capital One VentureOne Rewards13.74%-23.74%, variable13.74%3% or $25, whichever is greater110$3,000$1,515
Capital One VentureOne Rewards13.74%-23.74%, variable23.74%3% or $25, whichever is greater177$3,000$4,598

As you can see, even when you are paying the minimum, with the same card but the lowest and highest interest rate offered, the difference in the amount paid in interest is considerable, with the lowest rate paying more than $3,000 less in interest charges than the highest rate.

So, how do you get the lower interest rate? Card issuers look at a number of factors, including your credit score and your payment history, when deciding which rate to give you. Also, know that it's worth your while to simply ask for a rate decrease. A CreditCards.com poll found that of the 19% consumers who asked for a rate decrease, 13% were given what they asked for.

Why you should avoid keeping a balance on your credit card

Even with the best intentions, we can incur thousands of dollars on our credit cards within months. And often, it isn't because of an unexpected medical bill or car repair. Rather, everyday spending is the primary contributor to card debt, making up 32% of the reasons why cardholders have debt.

But it's not just the original expense that can impact your wallet – interest charges can actually run more than the original expense if you pay the minimum amount due each month.

And there's another reason why you should avoid keeping a balance on your card. The second most important factor of your credit score is your credit utilization ratio, or how much you owe on your cards compared to how much credit you have available. So, if you owe $500 and you have $5,000 in available credit, then your utilization ratio is 10%.

Figuring out your credit utilization ratio...

CardCredit availableAmount owedCredit utilization ratio
Barclaycard Arrival Plus World Elite Mastercard$2,000$200$200/$2,000=10%
Capital One Quicksilver$2,000$300$300/$2,000=15%
Discover it Cash Back$1,000$0$0/$1,000=0%
TOTAL$5,000$500$500/$5,000=10%

As you can see, there is a ratio for each card and a total ratio for all cards combined. Both matter. The industry standard is to keep the ratios under 30%, but it's best to keep them as close to 0% as possible, partly to avoid paying interest and partly to keep your credit healthy.

How do you avoid card debt?

Ideally, you stay away from card debt, partly because of your credit's health, but also because it's wasted dollars in the way of interest charges. But how do you avoid card debt? Here are 6 tips, with a sample budget:

  • Create a dual budget. Make a budget for all expenses, then create a row just for credit cards. Include everything, so that you don't come up short the next month.
  • Save. As you can see above, room has been made for savings. This isn't for a last-minute road trip – rather, this is for when your car breaks down or some other emergency occurs.
  • Check back each month. Check your budget each month to make sure you are on target. Adjust to ensure your budget is realistic.
  • Set a reminder. Create a reminder to pay the card bill before the due date. There's no point in having the money to pay the bill when you don't remember to pay it!
  • Enter the 21st century. There are a number of apps out there that can help you manage your finances, including YNAB (You Need a Budget) and Mint. Each differs in its approach, but it's a fair bet there's one that suits your style. Some, such as YNAB, sync with your bank, and most, such as Mint, help you track and pay your bills.
  • If you don't have the money for an item you want, set aside savings. Many financial institutions will allow you to create subaccounts that you can use for putting money aside.

Sample budget, with credit card expenses...

Credit card expensesItemChecking account expenses

Rent$1,000
$50Internet
$90Gym

Utilities$100
$100Auto insurance
$100Gas
$300Coffee, lunches

Savings$200
$300Groceries, misc.
$940TOTAL$1,300

How do I pay off my credit card balance?

Maybe you've already incurred debt on your credit card. What to do?

Here, we look at the 6 steps you should take to dig out from under that balance:

  1. Make a budget. First things first: Create a budget with room for saving and fun. That way, you don't have such an austere plan that you give up in frustration.
  2. Calculate the interest. Based on your balance, figure out how much interest you will be paying.
  3. Figure out how much you can pay each month. Now that you know how much interest you will be paying, figure out how many months it will take you to pay the balance off, with your trusty budget in hand.
  4. Transfer the balance. Consider using a balance transfer card, which will allow you to pay 0% or low interest for a limited time.
  5. Stop spending. Resist the urge to keep spending on your card; that will only get you deeper into trouble.
  6. Keep the card. After you pay off the balance, hang on to your card, putting a small charge on it each month and paying in full by each due date. This helps with keeping your credit healthy by having a higher available credit.

How do you avoid paying interest on a credit card?

There are a couple of ways to avoid paying interest on a credit card:

  • Pay in full each month. Interest is charged on a credit card when you carry a balance month to month. If you pay in full before the due date, then you avoid paying interest. While you are quoted an annual percentage rate (APR), the interest is calculated daily. So, if your card charges 15% APR, then you have a daily rate of 0.041096%.
  • Take out a 0% intro APR offer. If you have an existing balance or you have a large charge coming up, another option is to take out a balance transfer card or a 0% card. These cards will have an introductory offer of 6-21 months, which means you may have up to 21 months to pay the balance without incurring more interest.

How do you calculate interest on a credit card?

While you are quoted an APR, or annual percentage rate, your interest is calculated at the end of each day. To find out how much will be accrued each day, divide the APR by 365 days. Then, multiple that amount by the amount owed, and add that with the amount owed. Here's how you calculate how much you are paying each day:

  1. Divide 15% APR/365 days=0.041096%
  2. Multiply 0.041096%*$1,000=$0.41
  3. Add $0.41+$1,000=$1,000.41

As can be expected, the amount you owe each day goes up considerably the higher your balance. Take this example:

As you know now, most creditors assess interest or finance charges based on your average daily balance, and the interest is accrued daily, says credit expert Todd Ossenfort.

"Each day the balance of your account is multiplied by the daily periodic rate and the interest calculated is added to your balance," he says.

"As an example, a $13,000 balance at a daily periodic rate of .02805 percent would add $3.6465 in finance or interest charges to your balance.

"The next day of the billing cycle your balance would be $13003.65 and multiplied by the daily periodic rate would add interest charges of $3.6475, which begins to add up," Ossenfort says.

To calculate interest on a credit card, use our handy-dandy interest calculators, which allow you to figure out how long it will take you to pay off a balance with the minimum payment; how much you can save by speeding up the payment process; and more.

Our credit card calculators

Here, we offer 5 calculators to help you figure out which card is best for you, how long it will take you to pay off a balance and more.

How do APRs work?

The annual percentage rate or APR is a financial term that is used by lenders to let you know how much interest you are being charged on a yearly basis for your loan, says Ossenfort. APR is fairly simple for the fixed-rate loan example, he says. It gets more complicated with outstanding credit card balances. That's because you may have several different APRs on one credit card account.

For example, you may have an APR for balance transfers of 1.9 percent, an APR for purchases of 12 percent and a much higher APR of around 25 percent for cash advances, he says.

"The key ingredient to getting the best possible APR for any loan is to have your credit in the best shape possible," Ossenfort says. That means paying in full and on time, every time, and regularly checking your credit reports and score.

Types of APRs

Here are the typical APRs charged by card issuers:

  • APR for purchases. The most common APR, this rate is applied when you carry a balance. Some cards, such as the Amex EveryDay, offer a 0% intro offer for a set time, in the case of the EveryDay, for 15 months. Then, the balance is charged at the go-to rate of 14.74% - 25.74% variable, which is usually the standard rate for the card.
  • APR for balance transfers. Similar to the purchase APR, balance transfer cards will usually offer a 0% intro APR for a set amount of time, then revert to the go-to rate.
  • Cash advance APR. This rate usually kicks in immediately after you take out the cash.
  • Penalty APR. Some cards, such as Discover products, don't have this type of APR, while others do. It can be considerably higher, as much as 29.99% (variable) in the case of the Amex Everyday, which reassesses your payment history every 6 months to decide if this rate continues.

How does your credit score affect your interest rates?

The higher your credit score, the better your interest rate can be, depending on the product. This goes for both credit cards and installment loans such as mortgages and car loans. Some cards offer a range -- your credit score, payment habits and balance can affect the interest rate your receive.

In the case of installment loans, Forbes compares two neighbors, each with a refinance of $300,000 with a 30-year fixed mortgage. The difference is one has a 750 credit score, while the other has a score of 620.

Because of the score differences, the neighbor with the 750 score gets a 4.25% rate, paying $1,476 a month, while his neighbor gets a 4.75% interest rate, paying $1,565 a month.

Forbes points out that by paying 2 points or $6,000, the neighbor with the lower score can get the lower rate, a rate that the neighbor with a 750 score received at no extra cost, all because of having a great score.

In the same way, your higher credit score can get you a better APR on your card, typically from within a range. But how do you get a better credit score?

How to get a better credit score

  • Pay on time. This is your most important part of your FICO credit score. Always pay on time.
  • Pay in full. A part of the second most important aspect of your score, this is a habit that speeds up your chances of getting a better score.
  • Don't take out new credit. Resist the urge to take out new loans or cards until your score is where you want it to be.
  • Be patient. Part of your score is based on length of credit history. That's why it's important to keep on plugging with your good credit habits.
  • Ask. Once your score has improved, simply ask your card issuer for a better score. Our poll shows that when consumers ask for better rates, they have a shot for getting what they ask for.

How to compare two low interest credit cards

Low interest credit cards are about more than just the APR. You'll want to also factor in the different types of APRs, the annual fee and more.

Compare low interest cards...

CardPurchase APRCash advance APRPenaltyAnnual feeRewards
Discover it Cash Back13.74%-24.74% variable26.74% variableNo penalty APR; no late fee first time; return payment up to $37$0Enroll every quarter to earn 5% cash back on up to $1,500 in purchases made in rotating categories throughout the year; match cash back at end of first year
Capital One VentureOne Rewards13.74%-23.74% variable24.74% variableLate Payment Fee: up to $38$020,000 miles/$1,000 spend in 3 mths; 1.25X miles on purchases

As you can see, the cards' lowest rates and annual fees are comparable, while the cash advance rate is lower for the VentureOne. If you plan to pay off your balance, the rewards for either card can also be worth your while.

Who are low interest credit cards good for?

Whether you are carrying a balance or planning to get rid of one, a low interest credit card can be a good choice. Here are the people who might benefit from a low interest credit card.

  • Good credit. Typically, the better your credit, the better your interest rate on a credit card, although there are other factors a card issuer also looks at.
  • Carry a balance. Although carrying a balance on a credit card isn't ideal, if you must, a low interest card may be the best choice.
  • Great habits. If you are in the habit of paying on time each month more than the minimum, that will speed up your ability to pay off the balance.
  • Workable plan. Yes, you have a balance, but that doesn't mean you will always have one. Figure out how much you can afford to pay each month, stop incurring new debt, and keep your sights on the end goal.

More low interest credit card reviews

You can read some individual reviews for low interest credit cards at our reviews section. You can get a better ideas of how products compare to one another so you can definitively decide on the best offer for your needs. Link to rate report to compare to our current national averages.

Additional Resources

With our picks for the best low interest credit cards on this page, we cover a unique selection of credit cards with low regular interest rates. We have also curated and compiled a list of the best credit cards with long 0% APR offers and for balance transfers specifically — check them out:

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