Low interest credit cards compared

With Australians owing around $37 billion on 13 million credit cards, lots of people are looking to consolidate their personal debts. In recent years a new product has become an increasingly popular tool to do this: the low-rate credit card.

There are two main types of low rate credit cards, both offering different benefits to consumers. These are:

  • the ongoing low-rate card – these credit cards offer a permanently low interest rate on purchases for the life of the card. The downside of this type of card is that it often comes with quite hefty additional costs such as, cash advance, ATM withdrawal, additional card, application and annual fees.
  • the low introductory rate card – many providers are now offering low or zero interest rates on balance transfers. These can be valid for the life of the transfer or for a set period, often six months, after which the interest rate on all transferred funds will revert back to the standard interest rate.

Some cards offer a mixture of both schemes by having a zero introductory rate for balance transfers and a relatively low ongoing rate.

Some low-rate cards also offer member benefits and partner discounts which can be worth considering. A limited number of low-rate credit cards also offer attractive interest rates on cash advances, a feature missing on most traditional credit cards. However, some low-rate cards do not offer interest-free days on purchases.

The benefits of rolling over

As long as you do your homework and research all the options available, there can be many benefits to rolling over your existing credit card debt to a new, low-rate credit card.

If you can manage to pay your debt off within the introductory period, you can potentially save some money. The difference between interest charged at a rate of 16% and interest charged at 0% for six months can be substantial.

Alternatively, balance transfers to zero-rate cards can give you a period of relief from your ongoing debt. Not having to find a minimum repayment each month for six months can assist some people in consolidating their finances.

You can also benefit from having all your credit card debts in one place. One debt means just one payable amount each month, instead of the three or four you may have had with your existing cards. The more repayments required each month, the more opportunity there is to forget to make one, resulting in hefty late fees.

What low-rate cards are available

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