Low interest credit cards

Low interest credit cards are a cheap way to manage your purchases if you, ahem, forget to pay off the total balance from time to time. While many credit cards charge 20% or more on purchases, low interest rates can save you hundreds of dollars a year.

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Where can I find low interest credit cards?

Most credit card providers now offer low interest rate deals - and they're perfect for people with a little credit debt, as you'll avoid disastrously high interest payments and pay off your debt faster. However, you'll usually encounter an annual fee and little in the way of a rewards program.

Do I need the lowest rate credit card or a balance transfer?

Good question! So good, in fact, we can't answer it here. But with a couple of quick details our Credit Card Switch and Save calculator can answer it in seconds (it's that much cleverer than us).

Can I apply online for a low rate credit card?

Indeed you can - simply hit the 'go to site' button to the right of your low interest rate credit card and we'll shoot you through to an online credit card application with the provider.

Page last updated August 25, 2019

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Low interest credit cards

If you're on the hunt for a new or replacement credit card why wouldn't you choose one that has the lowest interest rate? Low interest cards, or low rate cards generally have an interest rate of 14% p.a. or less. With many credit card interest rates over 20% p.a., you may be wondering what the catch is with low interest cards. Read on as we outline the key features of low interest cards and explain some of the differences between their higher interest counterparts.

What types of low interest cards are available?

Banks are very good at marketing and so you'll find that there are a range of low rate offers available when you look for a new card. Generally, there three main types of cards offers that fall into the low interest category.

  • low ongoing purchase rate. Everyone from the big 4 banks to credit unions offer a basic low rate credit card, where the ongoing interest rate will be less than 14% p.a. These credit cards generally do not have rewards programs or extras like insurance. Like all credit cards, they allow you to make purchases online or in person on credit and pay them off over time. This guide (and section of our site) will mostly deal with these cards.
  • 0% purchase rate. Some banks will have limited time offers that allow you to make purchases on your card without having to pay any interest for several months. The period is usually between 3 - 12 months, after which purchases will revert to the standard purchase rate for the card. If you are interested in comparing cards with 0% purchase rate deals, check out our interest free credit cards section.
  • 0% balance transfer. Another popular option for reducing the interest you'll pay is a balance transfer. This is where you transfer a balance from another card, to the new card at a reduced interest rate (often interest free). Head to our balance transfer card section to compare these cards.

Features of low interest rate cards, what should I look for? 

Low rate cards have the same standard features as regular credit cards, these include:

  • Interest free days. Most low interest cards will have up to 55 interest free days. This means if you pay your balance off in full each month you will not pay any interest at all.
  • Worldwide access. You'll be able to make purchases online or in person worldwide through the MasterCard, Visa or American Express network. Just be aware that your bank may charge you foreign transaction fees for overseas purchases.
  • Tap 'n go and payPass. Credit cards now come chip enabled which means you can go contactless for purchases under $100 in Australia.
  • Cash advances. While your card will allow you to make cash withdrawals, you should generally try avoid using your credit card for this purpose. Interest free periods generally do not apply for cash advances and the interest rate is generally much higher than the standard purchase rate for the card.

Some low rate cards also offer:

  • Complimentary insurance. Many credit cards now come with overseas insurance cover and other insurances like price protection, extended warranty and purchase cover. Be sure to check eligibility criteria as this can vary.
  • Concierge. Some low rate platinum cards will come with concierge service to assist you with shopping, restaurant or entertainment bookings.

What fees could I pay with a low interest card?

Annual fee: Most low rate cards will have annual fees under $60, though if you opt for a platinum version you could expect to pay an annual fee of around $100 a year.

Cash advance fee: If you make a cash withdrawal you will either pay an upfront fee or a percentage fee of the cash advance amount whichever is higher.

Foreign transaction fee. Low rate credit cards are generally not designed for frequent international travel so you would expect to pay a foreign exchange fee on any purchases or withdrawals. The standard charge is around 3% of the Australian dollar transaction account.

Late payment fee. This fee can be completely avoidable so set up automatic monthly deposits for the minimum payment. Late payment fees can be as high as $30.

Replacement fee. If you lose your card you'll need to pay a replacement fee. Just be aware that the cost for replacing a card overseas will be much higher than if you lose your card in Australia. There may also be an emergency card fee on top of the replacement fee if you need the replacement card urgently.

Are low rate cards for everyone?

If you don't always pay your card balance off in full each month then a low rate card will be a great option for keeping your interest repayments to a minimum and make it easier to pay back your debt in a shorter timeframe.

There are a number of instances when an alternative credit card could be a better choice. These include:

  • You always pay off your balance in full each month. If you always stick within your card's interest free period then a card with a low interest rate won't really matter as you won't pay interest charges. You should think about finding a card with a low or no annual fee or consider getting a rewards card.
  • You travel internationally more than once a year. Foreign exchange fees can add up, so if you're going to be travelling overseas regularly you should really think about getting a card that doesn't charge international fees. See here for travel credit card options.
  • You shop frequently at international online stores. For the same reason that if you travel regularly, if you purchase goods from international sites you'll get charged a foreign transaction fee. Even if the site allows you to pay in Australian dollars your bank will still charge a foreign transaction fee for the Australian dollar amount, so consider getting a card that doesn't charge these fees.

How much could I save with a low rate card?

The amount of money you'll save by opting for a low rate card over a rewards card, for instance, will depend on your ongoing spending and repayment habits. But let's look at the following scenario as an example.

Jill has a credit card with a balance of $3000. This card does not have an annual fee but the interest rate is 19.99%. She can afford to pay back $300 a month. It will take Jill 1 year and cost her $359 in interest to pay off the card according to Mozo's credit card debt repayments calculator. If instead she had a low rate card from one of the Big 4 Banks, with a $59 annual fee and an interest rate of 13.49%, she would pay off the card in 11 months and only pay $260 interest.

Now, many people do not ever get their balance to zero as they make new purchases on the card, so the amount of interest paid over the life of the card is much higher, which is why having a low going interest rate is so important if you do carry a balance on your card regularly.

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