Are no interest credit cards worth it?

By Ceyda Erem ·

If you like to keep up with the latest in personal finance, then you might know that interest-free credit cards are among some of the latest offers to hit the market. As the name suggests, these are credit cards that feature no interest on an ongoing basis.   

In early September, NAB launched its Straight Up credit card and was shortly followed by CommBank’s Neo credit card, both resembling a Buy Now, Pay Later (BNPL) service. 

But should you be picking one up in the near future or are you better off sticking with a low rate credit card? To help you make a decision, we’ll look at the pros and cons, plus how they stack up to low rate and 0% introductory rates credit cards.

No interest credit cards vs low rate credit cards: what’s the better deal?

Besides having no interest rate, no interest cards also come with a few different features to the standard credit card. For instance, both the Straight Up and Neo credit card have a monthly fee, and fixed monthly payment, depending on your chosen credit limit. 

Low rate credit cards are credit cards that typically have an interest rate below 12%, a low annual fee and other charges. 

Although never having to pay interest might sound like a dream, the monthly fees have the potential to add up over time. For example, if you were to choose the $3,000 credit limit with the Straight Up card, you’d pay a $20 monthly fee - that’s $240 a year.  

By comparison, the average annual fee for a credit card below 12% is only $47.  

Let’s say you’ve racked up a balance of $1,100 on a no interest credit card, which has a $3,000 limit and $20 monthly fee and a minimum $110 repayment: it would take you 10 months to pay it off completely with a total spend of $1300

However if you were to have the same balance with the G&C Mutual Bank Low Rate Credit Card, you’d have the lowest purchase rate in the Mozo database of 7.49% and a $50 annual fee. According to the Mozo Credit Card Debt Repayments calculator, while it would still take you 10 months to pay off, you’d only pay an extra $83 in interest and fees - a difference of $117.

Which type of credit card is the right option for me?

Every Aussie has different spending needs, so it makes sense to compare all your options rather than picking the first offer. Some of your options for budget-friendly spending are:

  • Low rate credit card: These are great cards for everyday spending, as they allow you to carry a balance without costing a fortune. You might also consider a low rate credit card if you’re someone not fussed with earning rewards points or having flashy perks. 
  • 0% introductory rate credit card: If you’ve got a large purchase coming up, then opting for a 0% introductory credit card could be a savvy way to avoid paying interest. Just keep in mind that 0% rate on these cards do expire after a certain period of time, reverting to a rate that may be higher than 12%. 
  • No interest credit card: You might consider a no interest credit card if you don’t like the idea of having any personal debt and can afford to make the minimal repayments every month. Just keep in mind that the monthly fee can add up significantly over time.

Ready to start shopping around? Then make your next stop our low rate credit card comparison table or get started with the offers below!

Compare low rate credit cards - last updated February 20, 2021

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.
  • Apply By May 31, 2021
    Bendigo Bank Low Rate Credit Card

    0% p.a. balance transfer for 18 months (Reverts to 11.99% p.a). Low annual fee of $45 and no fees for additional cardholders.

    Purchase rate
    Balance transfer rate
    Annual fee
    11.99% p.a.
    0% p.a. for 18 months and then 11.99% p.a. (2.00% balance transfer fee)
    $45
    Compare
    Details
  • Defence Bank Foundation Credit Card

    Defence Bank Low Rate Credit Card offers a 3.99% p.a. 6 month introductory rate on balance transfers, purchases and cash advances. Up to 55 days interest free on purchases.

    Purchase rate
    Balance transfer rate
    Annual fee
    3.99% p.a. for 6 months then 8.99% p.a.
    3.99% p.a. for 6 months and then 8.99% p.a.
    $45
    Compare
    Details
  • ME frank Credit Card

    Meet Frank, a low rate credit card with up to 55 interest free days and no annual fee. If simple, hassle free spending is your goal, you and Frank might be a match made in heaven.

    Purchase rate
    Balance transfer rate
    Annual fee
    11.99% p.a.
    No current offer
    $0
    Compare
    Details
  • mini-meca-2020
    St.George Vertigo

    0% p.a. for 24 months on balance transfers requested at card application. No balance transfer fee. Rate then switches to applicable variable cash advance rate. First year annual card fee waived for the first year ($55 thereafter). Available to new cards only, Eligibility criteria and T&Cs apply. Offer ends March 2nd 2021. Mozo Experts Choice Balance Transfer Credit Card Winner 2020^.

    Purchase rate
    Balance transfer rate
    Annual fee
    13.99% p.a.
    0% p.a. for 24 months and then 21.49% p.a.
    $55 $0 in the first year
    Compare
    Details
  • mini-meca-2020
    NAB StraightUp Card

    $10/month - $1,000 Credit Limit

    Pay no interest and no late payment fees, just a $10 monthly fee for a $1,000 credit limit. Plus, if you don't make any purchases and have an outstanding balance of $0 during the whole statement period, the monthly fee will be reversed. Also pay no foreign currency fees when you shop online or overseas. Mozo Experts Choice Credit Card Innovation Winner 2020^.

    Purchase rate
    Balance transfer rate
    Annual fee
    0% p.a.
    No current offer
    $120 $10/month - waived if no spend & no balance owing
    Compare
    Details

^See information about the Mozo Experts Choice Credit Cards Awards

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