Low-Interest Rate Credit Cards Canada
If you typically carry balances on your credit card, you need a Low-Interest rate credit card. Such cards allow you to minimize the charges on your balances and pay back the money you owe quicker with the lowest interest among all credit cards. Here’s everything you need to know
Low-Interest Rate Credit Cards Explained
Should you opt for the Low-Interest rate credit cards, you’ll find that you incur a lower rate of interest on the purchases you charge to your credit card. For instance, in Australia, you can expect to pay standard variable rates of 10% per year on Low-Interest rate credit cards. However, the interest rate on most other credit cards can range from 15% to 24% per year. You may also receive promotional offers on Low-Interest rate credit cards that allow you to make purchases at 0% interest rates for a fixed time frame.
Kinds of Low-Interest Rate Credit Cards Available
- Standard Low-Interest Rate: These cards allow you to make purchases at variable interest rates of less than 15% per year. While you can expect to pay a low annual fee, you may not receive many perks or added benefits.
- Low-Interest Rate with Balance Transfer: You'll pay a Low-Interest rate on the purchases you make on these cards. You can also transfer an existing balance from another credit card you might have, and you'll probably pay 0% interest for a particular time.
- Low-Interest Rate with Introductory 0% Purchase Rate: For the initial promotional period that may extend for a few months, you can make purchases on this card at 0% interest rate. Once the promotional period is complete, you’ll pay the regular interest rate on all purchases.
- Premium Low-Interest Rate: Some companies offer you gold and platinum cards that allow you to make purchases at Low-Interest rates in addition to other benefits that may include concierge services and complimentary travel insurance. However, because of the added features, you can expect to pay a higher than the standard annual fee for using these cards.
Expected Savings on Low-Interest Rate Credit Cards
Every added percentage point in the interest rates can help you save money. Here’s how:
Say you have a debt of $2,000 on your credit card that you’ll pay off over 6 months. At interest rates of 20% per year, you’ll incur a charge of $118.3. However, if the interest rates were 12% per year as in Low-Interest rate credit cards, you’ll only incur a charge of $70.6. Accordingly, you’ll save $47.70.
Choosing the Best Low-Interest Rate Credit Card
When choosing the best Low-Interest rate credit card that is well suited for your needs, keep these important factors in mind.
- Applicable interest rates: Credit card companies charge you an interest rate on your balances by calculating it daily. You’ll see the total charge on your monthly credit card statement. If the interest rates are low, you’ll pay a lesser amount in interest.
- Interest-free days: Credit card providers may offer you interest-free intervals where they won't levy a charge on your purchases. You can make purchases free of interest as long as the time period But, if you haven't paid off the balance by the due date on your credit card statement, you'll incur the entire applicable interest.
- Cash Advances: The interest rate applicable on cash advances such as the ATM cash withdrawals, gambling, and foreign currency purchases you make is typically higher than when you buy other items using your credit card. Such transactions do not have interest-free intervals.
- Revert Rate: Credit card companies may offer you the facility of 0% rate of interest on your purchases or balance transfer offer. However, this offer may only last as long as the promotional period. Once this period ends, you’ll pay interest according to the revert rate. This revert rate may be high or equivalent to cash advance rates. It is advisable to assess these rates when making your choice.
- Applicable Fees and Charges: The annual fees on credit cards may range between $0 on basic cards to $250 or higher on platinum and gold cards. While the $0 interest rate cards may seem attractive, you might have to pay high base rates on your purchases.
- Added Fees and Charges: You may have to pay fees for ATM transactions, international transactions, or overdrafts on your credit limit. Check for the various charges you may have to pay when making your choice especially if you travel frequently.
Positives and Negatives of Low-Interest Rate Credit Cards
- You’ll incur low rates of interest on your purchases so managing credit card debts will be easier.
- You can look for Low-Interest rate credit cards with affordable annual fees.
- Some low rate cards allow you added benefits like no charge on foreign transactions and balance transfers.
- If you regularly have high balances on your credit card, Low-Interest rate credit cards can help you repay your debt and save on added charges and fees.
- Such cards may carry beneficial features such as complimentary offers, annual fees, and introductory Choose the card that matches your requirements.
- Some Low-Interest rate credit cards may not offer you benefits and reward points.
- You may have to evaluate the fees and charges on all credit cards before opting for the one that best matches your requirements.
- You may need to show that you have a good credit history to qualify for these cards.
Why Should You Opt for the Low-Interest Rate Credit Card
Opting for the Low-Interest rate credit card can have several benefits:
- Users that have a mortgage can consolidate their debt and opt for refinancing to a lower rate of the mortgage.
- You can use it to pay off a large balance on your credit card.
- You can use the card for everyday expenses or as an emergency source of funds since you’ll pay Low-Interest rates on them.
- This card is beneficial for users who regularly carry high balances on their credit cards.
- Although not advisable, you can use the card for cash advances.
- You can transfer all the balances from your various credit cards into one Low-Interest rate credit card. In this way, you can make monthly payments on a single card and pay Low-Interest rates.
Low Interest Credit Cards vs. No Annual Fee Credit Cards
There are a few factors to keep in mind when choosing a low-interest card: interest rates, the length of low-interest rate, special conditions for the low-interest rate, annual fees. Just like a regular credit card, low-interest cards will have competitive rates. Compare the different rates offered by the other benefits you will receive.
With some cards, the low interest is only for a promotion, meaning it will be temporary. So figure out how long the promotional low interest will last and decide if that fits with your financial goals. Next, you will want to make sure there aren't any sneaky "special conditions" that must be met to qualify for a low-interest balance. One example would be needing to meet a minimum dollar amount spent on a monthly basis. You would want to avoid this kind of card unless the other perks of the card will benefit you.
Next, you will want to make sure there aren't any sneaky "special conditions" that must be met to qualify for a low-interest balance. One example would be needing to meet a minimum dollar amount spent on a monthly basis. You would want to avoid this kind of card unless the other perks of the card will benefit you.
And lastly, you will want to check for annual fees. Most low-interest cards won't have these fees because of the type of customer they are catering too. But when it comes to your credit you want to make sure you are doing your due diligence. Sometimes getting a credit card with no annual fees would end up saving you more in the long run.
Compare Low Interest Credit Cards in Canada
Most credit cards will have average interest rates of 19.99% and up! However, a low-interest card is exactly what it sounds like: a credit card with a much lower interest rate. These cards typically have rates between 5% and 15%. A low-interest card will usually offer lower rates on other services such as balance transfers and cash advances. If these are transactions you need to make, you will know that a regular card will usually have an extra high rate for them. If that wasn't enough savings, you'll be happy knowing these cards typically do not have an annual fee, saving you another $100 or more a year.
If these are transactions you need to make, you will know that a regular card will usually have an extra high rate for them. If that wasn't enough savings, you'll be happy knowing these cards typically do not have an annual fee, saving you another $100 or more a year.
Whether you are paying for a vacation or having an online shopping spree, the assurance of having a reasonable interest rate on your credit card will help you enjoy these things more. In addition to the peace of mind when carrying a balance, using a low-interest card for everyday purchases or when those emergency situations arise is a great way to build credit while knowing you will be paying reasonable interest rates.
In addition to the peace of mind when carrying a balance, using a low-interest card for everyday purchases or when those emergency situations arise is a great way to build credit while knowing you will be paying reasonable interest rates.
Cash advances, while not generally advised, sometimes cannot be avoided. The lower fee that you will pay for cash advances with a low-interest credit card will make that decision a little bit easier and safer. A great time to use your low-interest card is when you have multiple cards. You can transfer the higher interest balances onto your low-interest card. Not only will it bring your monthly payments down to one, but you will be paying a fraction of the interest on that payment.
A great time to use your low-interest card is when you have multiple cards. You can transfer the higher interest balances onto your low-interest card. Not only will it bring your monthly payments down to one, but you will be paying a fraction of the interest on that payment.
Whether you are looking for a rewards credit card or a low-interest credit card, we help you compare and find the best credit card providers in Canada.