Consumers carried a total of about $850 billion in outstanding balances on their revolving credit accounts at the end of 2012. Needless to say, cardholders should always try to pay off their balances as quickly as possible in order to avoid paying a lot of money in interest charges on their purchases. But in the meantime, cardholders who do carry a balance and pay interest on their purchases should be using a card with the lowest possible interest rate.
Each credit card on the market will have several interest rates, so it can be hard to keep them straight. These rates can include an introductory rate, balance transfer rate, cash advance rate, penalty rate. But the rate applied to most regular purchases is the standard rate. This rate is listed in terms of APR, or annual percentage rate.
This month, we’re looking at the Best Credit Cards in America with the lowest standard interest rate. To make matters more confusing, nearly all cards offer variable interest rates that are based on the prime rate. Nevertheless, the prime rate, which is 3.25%, has not changed in since December of 2008 and few analysts expect it to change soon.
Finding the card with the lowest standard interest rate is not as easy as it sounds. Many cards offer a range of interest rates, with the lowest rates only being granted to the most highly qualified applicants. Furthermore, the best rates are frequently found at some of the smaller banks and credit unions.
How We Chose Our Winners
We looked at the cards offered to the general public by both banks and credit unions. This ruled out some of the institutions that only offered cards to members of the military and their families. We only considered each card’s standard interest rate, not any promotional rate that is being offered to new applicants for a limited time. When all else was equal, we gave a preference to the card that offered a single, low interest rate rather than a range of rates.
Why it won: This little-known card has an astonishing rate of 6.25% APR, the lowest standard rate of any card available to the general public.
The rates: This card has a standard rate equal to the prime rate plus 3%. This rate, currently 6.25%, applies to purchases, cash advances and balance transfers. The penalty interest rate is 18%, and there is no annual fee, balance transfer fee or overlimit fee for this card.
The features: Cardholders are offered a minimum credit limit of $5,000. This card also offers travel and emergency assistance, vehicle rental insurance and warranty manager service. In addition, cardholders earn points in the ScoreCard rewards program. While this program is not competitive with other reward programs, it is notable that a card with such a low rate offers any rewards at all. Applicants who do not currently bank with First Command must request an application by mail. Applicants must submit proof of income and verify their identity, and the process typically takes two weeks.
Why it won: With a single 7.25% variable APR for all approved applicants, this card is only available to those with excellent credit.
The rates: The rate of prime plus 4.25% (currently 7.25%) applies to both new purchases and balance transfers. The APR for cash advances and convenience checks is 11.25% variable APR. There is no annual fee or balance transfer fee.
The features: Cardholders receive a $1 million travel accident insurance policy, emergency cash and credit card replacement, and rental car collision damage waiver.
Why it won: In a virtual tie, this card also features a low standard APR of 7.25%. Yet it receives 2nd runner-up ranking because less qualified applicants may receive rates of 10.25% or 13.25%.
The rates: The standard rates of 7.25%, 10.25% or 13.25% apply to new purchases and balance transfers, but there is an introductory balance transfer rate of 1.99% for six billing cycles, and a 2% balance transfer fee. The cash advance APR is 12.75%, 16.25% or 19.25%. There is no annual fee for this card.
The features: This card features auto rental collision damage waiver, roadside dispatch and travel emergency services.
Compare these to other low-interest credit cards at Credit.com.
At publishing time, the Simmons First VISA Platinum Credit Card is offered through Credit.com product pages, and Credit.com may be compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.