Compare low APR credit cards

A low APR card could be considered as one with a rate of around 10%.

The credit limit you get on a low APR credit card - the maximum amount you’re allowed to spend - depends on the provider’s assessment of your credit history and financial stability, including your income.

You need to be careful that you don’t accept a credit limit that’s too low for what you need to buy. If you go over your credit limit, you’d be charged a fee. You might also be moved on to a higher APR for the card and your credit score could be damaged.

Yes, if you have to withdraw cash on credit, a low APR credit card could help you keep costs down. But always explore cheaper alternatives for withdrawing cash first. With most ATMs, you can take out cash from your bank account using your debit card without incurring any fees or interest.

Try to avoid withdrawing cash on a credit card unless it’s absolutely necessary, as there’s usually a fee to pay, and interest will be charged from the date of the withdrawal, even if you clear your balance in full the same month.

It’s also worth bearing in mind that you might pay a higher rate for cash withdrawals than you would for purchases or balance transfers made on your credit card.

It depends on your priorities. When you’re comparing, you can look at:

• APR
• Any non-standard fees and charges – for example, for missing a payment or for late payments
• Introductory offers (is there a 0% interest period for balance transfers and purchases?)
• Rewards or points 
• Customer service
• Eligibility criteria
• Security
• Application process

A low APR credit card could help you save money on purchases if you don’t always pay off your balance in full each month. Switching to a card with a lower interest rate could also help you pay off your debt faster.

The more of your balance you clear each month, the less you’ll pay in interest overall. The potential advantage of low interest cards is that if you do need to borrow for a while, you might pay less interest than you would on other cards. Over the long term, this could save you a substantial amount.

When applying for a low APR credit card, or any credit card/product, the card provider will look at your credit history to decide whether to approve or decline your application. The provider will assess your creditworthiness, including reviewing your credit history, looking at your income and outgoings, any existing or past debts and whether you were able to pay them off on time. If they decide to approve you for a credit card, this same information will then be used to calculate the interest rate you’ll be offered.

As a general rule, higher credit scores are rewarded with lower interest rates, while bad credit scores are charged higher interest rates. This is to offset any risk you may pose as a credit user if you weren’t in a position to repay the debt.

Many people use interest rate and APR to mean the same thing, but there is a difference that depends on the type of credit or borrowing. The interest rate is the figure used to calculate the cost of borrowing over a year, while the APR (annual percentage rate) includes the interest rate as well as any other fees tied to the credit or loan amount. So, if there are no extra fees, the interest rate and APR are essentially the same, but this isn’t always the case, so make sure you know which applies to you and the type of credit you’re applying for.

There are two ways that interest is calculated for credit cards:

• Daily balance method – the interest is calculated based on your outstanding balance at the end of each day during the statement period.
• Average daily balance method – the outstanding balance during the full statement period is averaged out between the number of days in that period. This is usually at the end of the month.

The simplest way to avoid paying interest on your credit card is to pay off your balance in full each month. Whenever you’re thinking about buying something with your credit card, you should know when you’re realistically going to be able to pay it off. If you don’t think you’ll be able to pay it off that month, then you’ll need to prepare yourself for the interest costs tied to your credit card. If you can’t pay it off in full that month, paying off more than the minimum amount due each month is the fastest way to get back to paying no interest.

If you’ve got existing credit card debt and want to avoid paying interest on it, you could consider a 0% balance transfer card, which will transfer any debt onto another with a 0% interest rate. This could then allow you to manage your debt more effectively and pay it off sooner. Just be aware that the 0% interest rate is dependent on your application, is for a limited period and often comes with conditions that must be met to maintain that rate. Ideally, you should ensure the balance is paid before the 0% balance transfer period expires, or you’ll be paying interest again.