The information about the Blue Cash Everyday® Card from American Express has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer. Compare Bankrate’s top low-interest credit cards* 3% fee on the amounts transferred within the first 15 months. A closer look at Bankrate’s top low-interest credit cardsDiscover it Cash Back: Best for first-year rewards
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Learn more: How to maximize value with your Citi Rewards+ Card. What is a low-interest credit card?A low-interest credit card is defined by its APR (annual percentage rate), which can be either variable or fixed. If the low end of the variable percentage is around 12 percent to 14 percent, it generally qualifies as a low-interest card. Most credit cards are variable-rate credit cards, meaning their APRs fluctuate alongside the prime rate. Given the cost of credit card interest, it’s important to minimize your exposure to interest charges or avoid them altogether. Bankrate estimates the average credit card interest rate at 17.85 percent variable as of August 24, 2022. Paying your balance on time and in full every month is the surest way to avoid interest and the method that we recommend. On the other hand, a low-interest card could help you pay less in interest if you do carry a balance.
Bankrate insight If you carry a credit card balance, you’re not alone: According to the National Foundation for Credit Counseling’s 2021 Financial Literacy Survey, 38 percent of adults carry a credit card balance month to month. Understanding your card’s interest rateAlthough annual percentage rates are expressed on a yearly basis, you’ll be charged each month as long as you carry a credit card balance. Your card’s APR will typically be listed on your monthly credit card statement. It can appear fairly straightforward at first glance but understanding how that percentage applies to your current balance requires some calculations. For example, if you currently owe $500 and your card’s APR is 15 percent, you’ll find that you owe $6.25 in interest for the month. The formulas are as follows: 15% APR ÷ 12 months = 1.25% monthly interest, 1.25% x $500 = $6.25 in interest. Pros and cons of low-interest credit cards
Who should get a low-interest credit card?Credit cards with low interest rates can come in handy for certain types of people in certain situations. Consider a low-interest credit card if you find yourself in these scenarios:
Still unsure if a low-interest credit card is right for you? Check out our Credit Card Spender Type Tool, where you can get personalized credit card recommendations based on your credit score, spending habits and daily needs. How to get a low-interest credit cardIt’s best to always pay your credit card balance in full each month, but if you’re unable to and you still want to save, a low-interest card is the way to go. To take full advantage of all of the benefits of a low-interest card and to find the best card for you, follow the steps below. Step 1: Build your credit to a good/excellent levelPeople with higher credit scores tend to qualify for lower interest rates on any kind of loan, including credit cards. If your credit is fair or bad, you may not qualify for the most advantageous rates. The first step is to find out what your current score is and check for any issues or errors on your credit report. If your credit needs work, stick to a long-term strategy for improving your credit score. Step 2: Explore all of your optionsOne of the keys to finding a low-interest card is how you compare and evaluate these offers. Go online to sort through your viable options and contact your bank or credit union to see what’s available to you. Find cards in your range, weigh the perks, and pay attention not only to the low ends of the variable APRs but also the high end. Step 3: Look for pre-qualified offersA pre-qualified offer involves an initial evaluation before beginning the actual process of applying. With pre-qualification, you won’t be subject to a hard inquiry that can temporarily lower your credit score. You can also check out Bankrate’s CardMatch™ tool to see which offers fit you best without impacting your credit score. How to reduce the credit card interest you payOne of the common misconceptions about credit cards is that they can be dangerous to your financial health. The truth is that credit cards themselves aren’t bad, but if you’re not careful, interest can quickly plunge you into debt. Low-interest cards are a great way to avoid hefty interest charges. Follow the tips below to keep interest payments at bay with your low-interest credit card:
More information on credit cards, interest rates and APRStill need to do more research? Bankrate has a wealth of resources on low-interest credit cards and related topics. Have more questions for our credit cards editors? Feel free to send us an email, find us on Facebook, or Tweet us @Bankrate.
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