Can a low rate credit card help you with the cost of living crunch?

collage two hands reaching to a low interest rate credit card

Been feeling the sting of the upwards trend of the cost of living? A high interest rate on your credit card could be adding to your wallet woes.

Right now, it seems as though everyone is grappling with higher costs. As our grocery bills rise and our petrol prices surge, everyday expenses can get out of hand quickly. If you’ve found yourself reaching for your credit card to spread out your spending, you could finally be feeling the impact of your card’s interest rate.

What difference does my credit card interest rate make?

The interest rate - also referred to as the purchase rate - on your credit card only makes an impact when you aren’t paying off your balance in full month to month. Credit cards tend to fall into different categories when it comes to the interest rates they charge.

  • High interest rates: When we talk about high interest rates for credit cards, we are talking about rates over 15% p.a. Cards with high interest rates tend to be beneficial in other areas. These cards tend to be rewards cards or have some other bonus like no annual fees. These are a good choice only if you know you are going to be paying off your balance in full.
  • Low interest rates: What counts as a low rate credit card varies depending on comparable rates on offer, but tends to be a card with an interest rate below 15% p.a. The current lowest rate card in Mozo’s database - excluding interest free offers - is the G&C Mutual Bank Low Rate Visa Card with a purchase rate of 7.49% p.a. That’s nearly 10% lower than the current Mozo database average rate of 17% p.a. A low interest rate is appealing in minimising the interest you have to pay on top of repayments.
  • Interest free: Although many cards offer an interest-free period, there are also an increasing number of interest free cards - cards with interest rates of 0%. The catch here is that these cards tend to have monthly fees instead of the usual annual fee - see the NAB Straight Up Card or the Commonwealth Bank Neo Card. With these cards, the higher the monthly fee, the higher the credit limit - but there’s no additional interest to pay. There are also cards with longer interest free offers, like the Bankwest Breeze Mastercard which has a 0% interest rate for 15 months before reverting back to a relatively low 9.90% p.a. rate.

Why should I choose a low interest rate card?

If you’re having trouble paying back your monthly balance right now, paying too much interest on your credit card could be making a big difference. Switching to a card with a lower interest rate if you know that you might not be able to make your payments in full every time could be a sensible option. 

Take a look at Mozo’s Best Credit Cards for 2022^ to find some of our favourites. If you’re looking to take the next step, be sure to flip through our guide to applying for a credit card.

Low rate credit cards - last updated 13 August 2022

Search promoted credit cards below or do a full Mozo database search . Advertiser disclosure
  • Virgin Money No Annual Fee Card

    Virgin Money No Annual Fee for the life of the card. 0% p.a. for 12 months on purchases (reverts to ongoing purchase rate) and balance transfers (reverts to cash advance rate).

    Purchase rate
    0% p.a. for 12 months then 18.99% p.a.
    Balance transfer rate
    0% p.a. for 12 months and then 20.99% p.a.
    Annual fee
    $0
    Details
  • Apply By 31 Oct 2022
    Westpac Low Rate - Cashback Offer

    Enjoy a super low rate of 13.74% with 55 days interest free plus up to $200 cashback - $50 cashback for each month you spend $1,000 or more on eligible purchases in the first 4 months from card approval. New Cards only. T&C's and exclusions apply.

    Purchase rate
    13.74% p.a.
    Balance transfer rate
    6.99% p.a. for 12 months and then 21.49% p.a. (1.00% balance transfer fee)
    Annual fee
    $59
    Details
  • Apply By 31 Aug 2022
    St.George Vertigo - Balance Transfer Offer

    0% p.a. for 32 months on balance transfers requested at card application. 0% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. No annual fee for the first year, $55 thereafter. New cards only, Eligibility criteria and T&Cs apply.

    Purchase rate
    13.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.49% p.a.
    Annual fee
    $55 $0 in the first year
    Details
  • Virgin Money Virgin Australia Velocity Flyer Card - Balance Transfer Offer

    Get in the air with a $129 Virgin Australia Gift Voucher each year. 0% p.a. for 28 months on balance transfers.

    Purchase rate
    20.74% p.a.
    Balance transfer rate
    0% p.a. for 28 months and then 20.99% p.a.
    Annual fee
    $129 $0 in the first year
    Details
  • Mozo Expert Choice Badge
    American Express Low Rate Credit Card

    Competitive low rate with $0 Annual Fee. Offers Card Refund Cover and Card Purchase Cover. Customers need an annual income of $50,000 or more.

    Purchase rate
    8.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $0
    Details

^See information about the Mozo Experts Choice Credit Card Awards

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