Best low interest credit cards

Low interest credit cards allow you to spread the cost of purchases relatively cheaply. It is always cheapest to pay off your balance in full before interest charges are applied, but if that is not possible, having a low interest card could be a good option. In this article you will find all the key information you need to know about the top low interest credit cards currently available in the UK.

What is a low interest credit card?

Interest charges are applied to your credit card balance if you do not pay off what you owe within the interest-free period, which is usually 56 days. The cheapest way to use a credit card is to clear the balance before interest charges are applied, but that may not be possible for everyone. Having a credit card with a low rate of interest means you can limit the interest you pay when not paying off your balance in full.

Your aim should always be to pay back what you owe within the interest-free period, which is usually around 56 days. Some cards come with longer initial interest-free periods, giving you longer to pay back what you owe without you having to pay interest. If you can clear your balance before the interest-free period runs out, you do not need to worry about interest charges, but a low interest credit card can give you peace of mind as a back stop. Spending on a high interest credit card means you take the risk of piling on interest charges if you hit a financial obstacle or an unexpected expense and cannot clear your balance. A low interest card functions as a solid emergency option.

Keep in mind that the representative APR figures you will see in this article and on provider websites are examples based on a presumed credit limit. What you are offered may be different, depending on your individual circumstances. Read our article 'What is representative APR?' for more information.

How to find the best low interest credit card

Money to the Masses uses Creditec*, an online comparison service that enables you to find credit card deals tailored to you without affecting your credit score. You will want to compare as many different options as possible before you get a new credit card, so it is a good idea to do a fast online comparison. With only a few basic details, the Creditec tool will build a personalised list of credit cards suited to your needs to help you navigate the huge number of options out there. You can then pick the result that suits you best. None of this will affect your credit score as the eligibility process uses a soft credit check. Click here to start your comparison*.

The best low interest credit cards – April 2024

Card name	Representative APR (variable)	Perks	Check your eligibility before you apply?
Co-operative Bank Three-Year Fixed Rate Card	8.9%*	Representative 8.9% APR (fixed) on purchases and balance transfers for the first three years	No
Tesco Bank Low APR Credit Card	10.9%	5 Clubcard points for every £4 spent at Tesco and 1 point for every £8 spent outside Tesco	Yes - Check eligibility
TSB Advance Credit Card	12.95%	0% on purchases and balance transfers for three months	Yes - Check eligibility
Bank of Scotland Platinum Low Rate Credit Card	10.9%	None	No
Halifax Credit Card	10.9%	None	Yes - Check eligibility
Lloyds Bank Credit Card	10.9%	None	Yes - Check eligibility
The NatWest Credit Card	12.9%	None	Yes - Check eligibility

*Representative 8.9% APR (fixed) on purchases and balance transfers for the first three years, changing to 18.2% (variable) for both in year four

The top-3 low interest credit cards

 Co-operative Bank Three-Year Fixed Rate Card

• Representative APR: 8.9% variable
• Representative example: When you spend £1,200 at a purchase rate of 18.9% (variable) p.a. with a fee of £0, your representative rate is 18.9% APR (variable). Representative 8.9% APR (fixed) on purchases and balance transfers for the first three years.
• Annual fee: £0
• Why we like it: A fixed APR of 8.9% for three years, which is lower than any other low interest credit card

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Tesco Bank Low APR Credit Card - Check eligibility

• Representative APR: 10.9% variable
• Representative example: When you spend £1,200 at a purchase rate of 10.9% (variable) p.a. with a fee of £0, your representative rate is 10.9% APR (variable)
• Annual fee: £0
• Why we like it: If you regularly shop for groceries at Tesco, it's a great way to earn extra Clubcard points. 5 points for every £4 spent at Tesco and 1 point for every £8 spent outside Tesco.

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 TSB Advance Credit Card - Check eligibility

• Representative APR: 12.9% variable
• Representative example: When you spend £1,200 at a purchase rate of 12.95% (variable) p.a. with a fee of £0, your representative rate is 12.95% APR (variable)
• Annual fee: £0
• Why we like it: As well as a relatively low standard rate of interest, you can benefit from 0% on purchases and balance transfers for the first three months

How to make the most of a low interest credit card

A low interest credit card allows you to keep a low rate for a long period, reducing the urgency to pay off your balance by the end of the billing period, potentially avoiding a significant interest charge. Of course, a credit card with a 0% interest period on balance transfers and/or purchases will be cheaper than a low interest credit card, but the offer will end at some point. When the interest does kick in, it will usually be a much higher rate than what you will see in this article.

The long term nature of a low interest credit card can also make it a useful budgeting tool. You know how much interest you will be paying if you do not clear the balance at the end of the billing period and you do not need to regularly switch cards and transfer balances to keep afloat.

What to consider before you get a low interest credit card

Before you get a low interest credit card, think about how you want to use it and consider what other options are available. A low interest credit card can be great for regular spending and as an emergency backup, especially if the top rewards cards or cashback cards are not available to you. It can also be a useful way to spread the cost of a purchase if you are not eligible for a top 0% credit card. However, if you have an excellent credit score and can access these alternative options, they may be worth considering over a low interest credit card. You could pay no interest at all for a considerable period of time or earn valuable rewards on your spending.

Of course, these options are not open to everyone, so it is important to check your eligibility before you apply. Additionally, the top credit cards often come with sky-high APRs and their value is contingent on you paying off the balance before the interest kicks in. If you think this is something you may struggle with, a low interest credit card could be a great solution.

Pros and cons of a low interest credit card

Here is a summary of the key advantages and disadvantages of using a low interest credit card:

Pros of a low interest credit card

• Consistency - There will be no dramatic rate rise after a year or two
• Fee-free - All of the low interest credit cards in this article come with no annual fee
• Good for budgeting - It should be easier to plan your spending knowing the interest you will need to pay on any debt will be relatively low
• Less pressure - There is less pressure to pay off your balance within the billing period, though you should always try to do so

Cons of a low interest credit card

• There may be cheaper options - Transferring a balance or spreading the cost of a purchase could be carried out using a 0% purchase or balance transfer card for free if you repay the debt within the promotional period
• Limited rewards options - Though there are low interest options that allow you to earn rewards, the very best cashback and rewards cards comes with a relatively high interest charge
• The low rate may not apply to everything - You could be drawn in by a low purchase rate, but find that the card charges much more for balance transfers, money transfers or a cash advance

Alternatives to low interest credit cards

The obvious alternative to a low interest credit card is a 0% credit card. If you clear the balance by the end of the promotional period, you will not need to pay any interest at all. If you do not, you may be hit by a significant interest charge. Anyone intending to spread the cost of a purchase should consider a 0% purchase credit card first, as even on a low interest credit card, the charges can add up if you maintain a balance for a significant period of time. The best 0% purchase credit cards come with introductory periods lasting many months, which should be enough time to clear your balance. Alternatively, you could consider a low interest rate personal loan. Check out our article to see the latest low interest loans available.

 

 

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