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Low-interest credit cards: 7 top options and how they can help you

If you carry credit card balances, consider low-interest credit cards to minimize your debt.

Chris Scott

Contributing Writer at Tally

September 24, 2020

The average American carries nearly $6,200 in credit card debt. That’s why it’s important to know your interest rate when opening a credit card: If you carry a balance on a card with a high-interest rate, your debt can grow quickly. 

Let’s look at the basics of low-interest credit cards, including what it takes to be eligible and how you can minimize your debt even if you don’t have one. You can also discover some of the best low-interest cards available today. 

Getting started with low-interest credit cards

The interest rate on a credit card is the rate that a lender charges you to borrow money. If you pay off your credit card in full each month, you do not need to worry about interest charges. 

For example, if you charge $800 on a credit card between March 1 and March 30, your statement will reflect this balance at the end of the month. If you pay the full $800 by your statement due date, you will not have any interest to pay. If you pay a portion of the balance, you’re charged interest on your remaining balance, which increases the total amount you owe. 

Credit card companies refer to the interest rate as the annual percentage rate (APR). A low-interest credit card is one that has an APR below 14%. 

Lenders may offer an introductory APR when you open a new account. The intro APR is often 0% for the first 18-21 months of account opening. As long as you make the minimum payments on the balance, your credit card issuer will not charge interest during this promotional period.

After the introductory period expires, the regular APR becomes the standard interest rate. However, if you miss a payment or make a late payment, your credit card issuer will immediately void the introductory APR and replace it with the regular APR or a penalty APR. 

A penalty APR is even higher than the regular APR, which is one reason why missing payments can be so costly. 

A good time to take advantage of an introductory APR is when making a large purchase. For instance, let's say that you just moved into a place and need to buy furniture. A new couch costs $1,500. You charge this purchase on a card with a one-year promotional 0% APR offer. 

Now, let’s say you make $100 monthly payments toward the balance. By the time the promotional period ends, you've paid $1,200. A higher interest rate will go into place when the period ends, but you are only charged interest on the remaining $300 balance. A low-interest credit card allows you to spread out payments for big purchases. 

Low-interest credit card eligibility requirements 

The eligibility for low-interest cards varies from lender to lender. 

If you have an average credit score — about a 680 FICO Score — you’ll likely qualify for low APR credit cards. However, the low-interest card may come with a few drawbacks, including a low credit limit, annual fees and few (if any) bonus points. 

If you have excellent credit — a FICO Score of 800 or more — you will likely qualify for a low credit card interest rate with other potential benefits such as a cash-back rewards program

Be mindful of how often you apply for credit cards. Every time you apply for a card, the financial institution will check your credit report. Doing so is a hard inquiry, which will ding your credit score by a few points. 

If you apply every once in a while, it's not a big deal. But if you have poor credit, continually submitting applications will make it even more difficult to build your credit. 

Some lenders allow you to enter your information — such as your name, address, and income — to determine whether you are eligible for their card. In these cases, lenders perform a soft inquiry that does not harm your credit score. If you’re deemed eligible, you can apply. The lender will then conduct an official hard inquiry when receiving your application. Be sure to read the fine print before officially applying. 

Options if you have a high-interest credit card and can’t open a low-interest card

If you carry debt on a high-interest credit card, you want to minimize your total debt. One way to do so is through a balance transfer credit card. A balance transfer card typically has a low APR — or at least an APR lower than the one on your current card. 

With a balance transfer card, you move your outstanding balances to one card. You must pay a balance transfer fee when doing so, usually 3% to 5% of the total amount of debt you transfer. Do the math and read the fine print to ensure you’re saving money in the long run.

Another alternative to opening a new card is to get a line of credit with Tally. Tally is a credit card payoff app that offers a lower APR than you’re currently paying to help you get out of debt faster.

When you pay off your debt, you improve your creditworthiness. Once you build a good credit score, you can apply for a low-interest credit card with perks like cash-back or a rewards program. 

You can also negotiate your credit card APR, either online or by calling the lender’s customer service line. While there is no guarantee you’ll end up with a lower APR, it’s worth a shot. 

The 7 best low-interest credit cards available today 

If you're ready to apply for a low-interest credit card, consider the following options. 

1. Citi Double Cash Card 

The Citi Double Cash Card has no annual fee and offers cardholders 1% cash back on every purchase. When you pay off your balance, you receive an additional 1% cash back. The card has a standard variable APR ranging from 13.99% to 23.99%. 

2. American Express Cash Magnet Card 

The American Express Cash Magnet Card offers 1.5% cash back for eligible purchases, including dining experiences and sporting events. American Express also provides a $150 statement credit if you spend up to $1,000 on the card within the first six months. Like the other cards on this list, this credit card has a variable APR between 13.99% and 23.99%. There’s a 0% introductory APR for the first 15 months and no annual fee. 

3. Blue Cash Everyday Card from American Express 

The American Express Blue Cash Everyday Card offers an excellent rewards program for everyday purchases. Cardholders receive 3% cash back on grocery store purchases up to $6,000, 2% cash back at gas stations and department stores, and 1% cash back on all other purchases. American Express offers a $150 statement credit when you open the account. The card has no annual fee and carries a variable APR that ranges from 13.99% to 23.99%. 

4. Wells Fargo Visa Signature Card 

The Wells Fargo Visa Signature Card offers five times the rewards points during the first six months, up to $12,500 at gas stations, drug stores, and grocery stores. This credit card is unique because your creditworthiness determines the APR. Those with excellent credit can get an APR as low as 12.49%, while those with average credit might receive an APR as high as 25.49%. 

5. Citi Diamond Preferred Card

The Citi Diamond Preferred Card stands out because it has an extended introductory period. There is a 0% APR on new purchases and balance transfers for the first 18 months from date of account opening. The card offers a variable APR ranging from 14.74% to 24.74%. You also receive free access to your FICO Score online with this card. 

6. Citi Simplicity Card 

The Citi Simplicity Card comes with a generous balance transfer offer. There is a 0% APR on balance transfers for the first 18 months. After that, the regular APR varies from 14.74% to 24.74%. There is no penalty APR if you’re unable to pay your balance by the end of the transfer APR period. 

7. Amalgamated Bank of Chicago Union Strong Mastercard 

The Amalgamated Bank of Chicago Union Strong Mastercard offers a very low interest rate. There is a 0% APR introductory period for the first year on new purchases. There’s also a 0% rate for 18 months on balance transfers from the date of first transfer. After that, the regular APR is 9.25%. Cardholders also receive a $150 statement credit and various rewards points. There are no foreign transaction fees when using this card abroad. 

Minimize debt with low-interest credit cards 

If you pay off your credit card balance in full each billing cycle, then you don't need to worry about your APR, since you will never accumulate interest. But if you don’t pay in full each billing cycle, your debt can increase. In these circumstances, a lower interest rate is critical since it reduces the amount of interest charged. 

If you have a strong credit history, you can apply now for a low-interest credit card. Our list of the best low-interest credit cards is an excellent place to start your search. 

If you already carry balances on credit cards, you may not be eligible for a low-interest card. In this scenario, you can use a balance transfer card or a line of credit like Tally to pay down your debt quickly. Paying down debt allows you to rebuild your credit score, save money and become eligible for better credit card offers.