Best Low Rate Credit Cards
not everyone has a set agenda when it comes to choosing the right credit card – paying off existing card debt or making an interest-free purchase, for example.
For many, who may just want to rely on a credit card for occasional borrowing, the interest rate is the most important factor to consider. Figures from the Bank of England show that the average credit card APR (annual percentage rate) is just over 18% (variable) with some cards carrying APRs over 30%.
It is possible to reduce costs by purchasing a low interest, no-frills or “low APR” credit card.
What is a low rate credit card?
Low-interest credit cards mean you can borrow at a significantly lower-than-average APR, with some cards currently offering representative APRs of less than 8% APR (variable).
However, the rate offered to you – and even if you are accepted – will depend on your credit score, income, and personal circumstances.
At ES Money, we have carried out desk research (June 2021) to find the best low rate credit cards on the market, which we’ve outlined below.
Keep in mind, however, that what is available – and how much vendors are willing to drop – can change depending on market and competitive conditions.
Additionally, not all applicants will qualify for the best offers.
What are the best low rate credit cards?
Here are some of the best deals we found (June 2021)
1. TSB Advance Mastercard – 5/5 stars
TAEG representative: 7.9% (variable)
Availability: Not open to existing TSB cardholders
In addition to the lowest “non-promotional” rate available, this card also offers three months interest-free on new expenses and balance transfers (for a fee of 3%). With that said, there are better 0% cards on the market for spending and debt relief if that is your primary goal.
Some applicants will also be offered a higher representative rate of 11.95% or 15.95% APR (variable).
2. Cooperative Bank 3 Year Fixed Rate Credit Card – 5/5 stars
TAEG representative: 8.9% (fixed) reverting to 18.3% (variable)
Availability: Must be an existing customer
The rate of this card is attractive low. But, unlike TSB’s offer, it is temporary.
For the first three years, a representative APR of 8.9% (fixed) applies on purchases and balance transfers, after which a universal rate of 18.3% (variable) applies. If you are transferring a balance, a 3% charge will apply of the amount In the question.
However, to get the most out of this card, you will need to clear your balance before year four, or face more than doubled interest on the balance.
3. Tesco Bank Low APR credit card – 4/5 stars
TAEG representative: 9.9% (variable)
Availability: Cannot hold more than one other Tesco Bank credit card
With a unique representative APR of 9.9% (variable), this card is a good bet in terms of rate alone. But you can also accumulate Clubcard points wherever you use it.
In Tesco stores or gas stations you can earn 5 additional Clubcard points for every £ 4 spent – on top of your standard points, while outside the store you earn points for every £ 8 spent on the card .
It accepts balance transfers, but there is no 0% promotional rate.
Keep in mind that you may also be offered a rate of up to 16.9% APR (variable) depending on your situation.
4. NatWest Credit Card – 5/5 stars
TAEG representative: 9.9% (variable)
Availability: Must be an existing customer
The NatWest credit card, also charging a representative APR of 9.9% (variable), is rate-savvy but also a convenient card to take abroad, charging no foreign transaction fees.
Although there is no introductory rate on balance transfers or purchases.
It may also be offered to you at a higher representative rate of 15.9% or 18.9% APR depending on your situation, in which case the card may not be the “low APR” offer you had in mind.
Exactly the same card is also available from sister banks of NatWest, RBS and Ulster. However, in all cases, you will need to be an existing customer to apply.
5. Lloyds Bank Platinum Low Rate Credit Card – 4/5 stars
Rep. APR: 9.9% (variable)
Availability: Open to new and existing customers
The Lloyds Platinum Low Rate Credit Card offers a representative low APR of 9.9% (variable).
You can transfer the balance, but there is no 0% offer and the fee is 5% of the debt transferred. Open to new and existing customers, it’s also one of the most accessible options in the low fare arena.
How did we rank the cards?
Low rate cards are ranked primarily on the representative APR, but note that not all of them are available to new customers.
When the representative APRs are the same, additional benefits have been factored in, such as expense rewards.
Here is more information on how low rate credit cards work, along with some frequently asked questions.
Is a low rate credit card right for me?
How you use your credit card will determine if a low rate card is right for you.
If you clear your balance every month and never incur an interest charge, look for a card that offers you a reward for your spending, as the interest rate will become irrelevant.
Likewise, if you have card debt but tend to maintain good control over your finances, you might be better off sticking with a 0% balance transfer card and going down from 0%. at 0% before the interest charge takes effect.
How much could a low rate credit card save me?
Whether you have a balance to transfer or regularly pay interest on your credit card spending, one of these low rate credit cards can dramatically reduce the amount you pay.
For example, suppose you have a balance of £ 1,000 on a credit card and can afford to pay £ 100 every month.
With a card with an APR of 19.9%, you’ll end up paying off an additional £ 93 of interest by the time you clear your balance. If you had taken out a low interest card with an APR of 7.9%, you would only pay £ 36 in interest, saving you £ 57.
What are the other benefits of a low rate credit card?
As with any credit card, spending on a low rate card will provide protection on what you buy.
This is because when the purchases cost more than £ 30,000 and up to £ 100,000, the card provider becomes jointly liable with the retailer under section 75 of the Consumer Credit Act in the event of problem, such as the item is defective or not as described.
This protection will also cover you if the retailer goes bankrupt before you receive your goods or services.
How to choose a low rate credit card?
In addition to the rate, it is also important to weigh a few other features of the card.
Check if there is an annual fee. These are relatively rare now and none of our cards listed above charge one. But always check that it is a cost to factor in your sums.
If you are transferring a balance, also look at the fees for that. Balance transfer fees can be charged up to 5% of the amount you move, which can make an attractive APR shine.
It is also particularly important with these offers to obtain the advertised rate. Legally, credit card companies must only offer the advertised interest rate to 51% of successful applicants.
By shopping around and looking at how the overall costs stack up on different cards, you will make sure you get one that best suits your habits.
How To Get The Most From A Low Rate Credit Card?
While a low rate credit card can mean that you will be charged less interest if you transfer a balance, there is another key point that will determine how much it will cost you. The more you can repay each month, the faster you can pay off the balance and the less interest you will incur.
For example, if you transfer £ 5,000 to a card with an 8.9% APR and pay back £ 200 each month, it will cost you £ 526 in interest and two years and four months to settle the balance.
Increase your monthly repayments up to £ 300 and it will take 18 months to settle them and cost you £ 342 in interest saving you almost £ 200.
Another way to benefit from a low interest credit card is to set up a monthly charge for your repayment. This ensures you never miss a refund, which not only helps lower your balance but also saves you additional interest charges as well as late payment fees.
It will also protect your credit rating.