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 Money
Page > Credit
Cards > Low Interest Credit Card - UK Guide
 In a
nutshell
Credit cards that charge low interest
rates/APRs on the money you owe.
Best
Credit Card For
Anybody looking to save money on
credit card spending. Low interest credit cards are
particularly useful to consumers that don't repay their credit
card balance in full every month.
Credit
Amount
The credit limit you'll be given will
depend on your income, your credit rating and the credit card
company you choose. Each card provider will have their own
limits and ways of applying them so there is no standard
across the industry. In general terms you'll be given higher
limits for better credit ratings and lower limits if you have
poor credit. Some cards - such as premium credit cards - may
come with higher credit limits built in but you'll have to
earn a certain amount (i.e. £20,000+) before you can qualify
for one. Some premium cards impose no credit
limits.
Advantages
If you
don't pay off your credit card balance every month, then
you'll reap specific benefits from a low interest credit card.
The lower your interest rates, the less interest will be added
to the balance you owe every month. So, you can use a low
interest credit card to make sure that you keep these interest
additions as low as possible.
What to
look out for
It can be quite hard to get the best
low interest credit cards - especially if you have a poor
credit rating. So, you may apply for a low interest rate card
and find that you are actually offered higher rates than those
advertised as you are seen as a higher risk. The best rates
are reserved for consumers with impeccable credit records and
some card companies can be particularly fussy about who they
give the lowest rates to. Low interest rate credit cards can
also lull some consumers into a false sense of security. They
give a comfort factor and it is easy to spend more than you
should because you know that the interest charges will be low.
However, credit card interest charges - no matter how low they
are - are among the highest within the consumer finance
sector. So, if you have any interest being added every month
then you'll see your debts grow relatively
quickly.
Some credit card companies also only offer low
interest rates for a specific period. So, once your
introductory offer is up you'll go on to their standard rate -
and this can be a lot higher than you would be given for a
mainstream credit card. You must also make sure that you try
to make at least your minimum payment every month - failure to
do so will result in penalty fees and costs. And, missed
payments will eventually turn up on your credit rating which
could affect your chances of raising finance in the future. If
the worst comes to the worst and you stop making payments
altogether then you run the risk of having your
property/possessions repossessed via the courts to repay what
you owe.
Alternatives
A good
low interest rate credit card has no real alternative if you
don't think you'll be paying off your balance every month. If
you always pay off your balance then you could look at other
deals such as reward schemes as interest rates won't be your
primary concern.
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