How Do Low-Interest Credit Cards Work?

Learn some of the ins and outs of credit cards with low interest


Sometimes less is more. And having a credit card with a low interest rate (or APR) is a perfect example. 

If you carry a balance each month, you’ll be charged interest on the unpaid portion. And since interest is a key factor in how much you’re charged, finding a low-interest credit card can lessen how much you’ll pay in the long run.

See? Less interest can potentially mean more savings! 

When Is an Interest Rate Considered Low?

There’s no industry standard for what’s considered to be a low interest rate. However, the Federal Reserve determines the national average every quarter. For the fourth quarter of 2019, the average interest rate was 14.87%.

Your credit card’s interest rate might be higher or lower than the national average, depending on things like your credit score and credit history. Just remember, the average credit card APR isn’t necessarily what you’ll get on a credit card you’re approved for. 

Some cards offer a 0% introductory APR. This means that for a certain number of months you won’t pay any interest when you carry a balance. Just be sure to keep making your payments on time, and read through the terms and conditions to make sure you fully understand the offer.

Low-Interest Credit Cards and No Annual Fee

In some cases, you can get the best of both worlds and find a card with a low interest rate that has no annual fee. That means you’ll not only have a low APR, but you also won’t be charged a fee for keeping your account open every year.

How Does Credit Score Affect Interest Rate?

Your credit history, credit score and credit activity can affect the APR you’re offered. And a higher credit score potentially means better credit card options with lower interest rates. On the flip side, a low credit score may limit your choices. In that situation, lenders may offer you an entry card that has higher rates.

It can be helpful to understand what lenders take into consideration. They’ll typically look at things like your payment history, how long you’ve had accounts open and how much of your available credit you’re using. Whichever card you decide you’re interested in, it’s probably a good idea to try to improve your credit score.

Low-Interest Credit Cards Without a Balance Transfer Fee

A balance transfer moves the amount you owe on one credit card to a new card. It doesn’t lower the balance you owe. But if you transfer your balance to a new card with a lower APR, you can potentially save money on interest.

And if you’re being charged less in interest, that means you might be able to pay off your balance faster. Consider a card that not only has a lower interest rate but one that also won’t charge you a fee for transferring the balance. 

Can You Ask for a Low-Interest Credit Card?

If you contact a lender, you can absolutely ask about cards with a lower interest rate. You’ll still have to go through the process of applying. But lenders should be able to go over their different cards with you as well as the interest rate on each. Never be afraid to ask!

Find the Low-Interest Credit Card That’s Right for You

Before applying for a card with low interest or considering a low introductory APR sign-up offer, make sure you know your credit score, and take time to consider your spending habits. If you apply for a low introductory offer, be sure you know what the interest rate will be after the promotional period ends—especially if you regularly carry a balance. Once you apply, you’ll usually find out if you’re approved in no time!


We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

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