Enjoy lower interest rates when you carry a balance and save money on your credit card bill.
Compare the latest Low Interest Rate Credit Cards
The finder.com.au list of Low Interest Rate Credit Cards
Compare the features of the low interest rate credit cards below.
|Credit Card||Purchase Rate||Annual Fee|
|11.99% p.a.||$0 p.a.|
|13.99% p.a.||$59 p.a.|
|11.49% p.a.||$49 p.a.|
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Complete guide to low interest credit cards
What is a low interest rate credit card?
Low interest rate cards offer a much lower interest rate for purchases than standard credit cards. While the typical range for interest rates on cards in Australia is 15% to 24% per annum, low rate cards offer standard variable rates as low as 10% p.a. Some cards even offer promotional 0% rates on purchases for a fixed period (you can learn more about those in finder's guide to 0% purchase credit cards).
A low interest rate credit card makes sense if you regularly pay with plastic and know you won't always pay off the balance in full each month. It gives you the flexibility to pay back purchases over time, without the higher interest charges of some other cards.
If you have a large existing credit card debt and want to pay it off, you may want to consider a balance transfer card instead. If you always pay your balance in full, then a card with a low annual fee or extra benefits such as reward points might make more sense.
What types of low interest credit cards are available?
- Standard low interest rate. These credit cards typically offer standard variable purchase rates below 15% p.a. and have a low annual fee. Usually this type of credit card only has essential features or limited extras as a way to keep charges low.
- Low interest rate with introductory 0% purchase rate. These cards let you make purchases with 0% interest during the promotional period, usually for the first few months you have the card. After that period, the standard purchase rate for the card will apply.
- Low interest rate with balance transfer. These cards charge a low rate on purchases and also let you transfer your existing balance from another credit card (usually with 0% interest on that balance for a fixed period).
- Premium low interest rate. Some gold and platinum cards offer low purchase rates and include perks such as complimentary travel insurance or concierge services. Note that the annual fees for gold and platinum low rate cards will usually be higher than those charged for standard low rate cards as a result of the premium features available.
How much money can I save with a low rate credit card?
Even a small difference in credit card interest rates can save you a lot of money. Say you have a $2,000 balance on your credit card and you take 6 months to pay it off. With an interest rate of 20% p.a., you'd pay $118.30 extra on your debt.
But if you had a card with a low interest rate of 12% p.a., you'd pay $70.60 in interest charges over the same time period. That's a saving of $47.70. And the bigger your expenditure, the bigger the difference gets.
How to compare low interest rate credit cards
If you're interested in getting a low interest rate card, comparing your options will help you find a card that suits your needs. Here are the key factors you should consider:
Credit card interest is typically calculated daily on your existing balance, and charged monthly to your account on the statement due date. The lower the rate, the less overall interest you'll pay. As well as the rate that applies to new purchases and your existing balance, consider the following:
- Interest-free days. If there's an interest-free period for purchases (and you're eligible for it), interest won't be calculated on those purchases until after that period ends. However, interest will apply in full if you haven't paid off the total owed by the due date on your statement. Learn more about how this works in our guide to interest-free days.
- Cash advances. The interest rate for cash advances is usually higher than the rate applied to purchases. This rate is charged for transactions such as ATM cash withdrawals, foreign currency purchases and gambling. There is also no interest-free period, so avoid making cash advances unless it's an emergency.
- Revert rate. If you get a credit card with a 0% purchase rate or balance transfer offer, this is the interest rate that applies when the promotional period ends. Always check this rate before choosing a credit card and avoid offers with high revert rates. For example, if it's the same as the cash advance rate, that's a clear warning sign.
Fees and charges
- Annual fee. Try to find a card with a low annual fee, but don't make this your sole deciding factor. A $0 annual fee isn't helpful if the base interest rate on purchases is a lot higher. Annual fees typically range from $0 for cards with basic features to $250 or more for gold and platinum cards.
- Other fees and charges. Fees may apply for using your card in an ATM; for using the card overseas; or if you overdraw your credit limit. Make sure you're aware of the relevant charges that apply to your card. If you're a regular traveller, consider a card with no foreign currency fees.
While most low rate credit cards have limited features, more premium cards could offer a few extra perks. Some of the most popular include:
- Complimentary extras. Gold or platinum low rate credit cards may include perks such as travel insurance, purchase protection insurance or concierge services. If you use these extras, they have the potential to offset the cost of any annual fee you pay.
- Rewards. Most low rate credit cards don't offer rewards points for your spending. Currently the American Express Essential is one of the only products that earns points per $1 and has a low standard variable purchase rate. Another option is the Coles Low Rate Mastercard, which doubles as a flybuys rewards card and offers a bonus 1 point per $2 spent at Coles Supermarkets.
- No international transaction fee. If you plan to use your credit card when you travel overseas or shop online with international retailers, a low rate card that waives foreign transaction fees – such as the Bankwest Breeze Platinum Mastercard – could help you save even more money.
Benefits and drawbacks of low rate credit cards
- You'll pay less interest on purchases, making it easier to manage your credit card debt.
- Many low rate cards also have low annual fees.
- You can often combine low rate cards with other features such as balance transfers or zero foreign transaction fees.
- You're less likely to receive reward points and other perks.
- You may not qualify if you have a poor credit history.
If you often carry a balance, a low interest credit card could help you save on additional fees and charges. Just remember to consider the other features – such as introductory offers, annual fees, and complimentary extras – to help you find a card that best suits your needs.
Answers to the most frequently asked questions about low interest rate credit cards
- Q: What does "low rate" refer to and when won't it apply?
A: With this type of credit card, the "low rate" description refers to the purchase rate for that card. This is the interest rate that's applied for most transactions you make. It usually doesn't apply for cash advance transactions, including cash withdrawals, gift card purchases, foreign currency purchases, gambling transactions and some BPAY transactions.
- Q: Does the low interest rate apply to balance transfers?
A: This depends on the credit card and any applicable balance transfer offers. When you transfer a balance to a credit card, you usually get a promotional low or 0% interest rate during the introductory period before reverting to a standard rate for that card. Some low rate credit cards apply the standard purchase rate to balance transfers after the introductory period, such as the Bankwest Breeze Mastercard or St.George Vertigo Visa, while others apply the cash advance rate. Read our guide on balance transfer revert rates to find out what providers apply the purchase rate.
- Q: What other interest rates apply?
A: Low rate credit cards also have a cash advance rate that applies to cash advance transactions. Depending on the card, the cash advance rate will apply to any or all of the following: cash withdrawals from an ATM or supermarket, foreign currency purchases, gift card and prepaid debit card purchases, gambling transactions, BPAY transactions, government charges and balance transfers after the introductory period.
- Q: What is the best* low interest rate credit card?
A: There is no one "best" low rate credit card in Australia. With so many cards on the market, the individual features have an impact on how well a card is suited to your circumstances. So the card that's right for you may not be right for someone else. Comparing low interest rate credit cards based on the features you're looking for will help you find an ideal card for your individual needs.
- Q: Do low interest rate credit cards come with interest-free days?
A: Most low rate cards offer an interest-free period on purchases, up to a set number of days in each statement period. However, interest-free days are only available for purchases if you pay your balance in full by the due date on each statement.
- Q: I have a low rate card with 0% on purchases for 6 months. Do I still have to make repayments?
A: Yes, you will still have to pay at least the minimum amount for each statement period. Depending on your credit card provider, this is usually around 2-3% of your total balance. If you want to avoid interest charges, you'll need to may higher repayments to clear your balance before the end of the promotional 0% interest period.
- Q: How is credit card interest calculated?
A: Although the interest rate advertised is a yearly (per annum) number, credit card interest is actually calculated daily based on your average daily balance. It's then charged to your account at the end of each statement period.