Low-rate credit cards are one of the most popular types of card in Australia. The best low-rate credit cards in Australia feature a low purchase interest rate under about ten per cent, a low annual fee, up to 55 days interest-free and reasonable other fees and costs. Some of the lowest rate credit cards in Australia also feature links to Qantas Frequent Flyer or Velocity Frequent Flyer programs. Before you compare low interest rate credit cards in Australia, have a quick read of Your Guide to low-rate credit cards: Why would you want a low rate credit card? Low rate credit cards are designed for people who often carry a balance on their cards and who want to keep their interest payments manageable. People who are new to using credit, students or beneficiaries might find these cheaper and often fairly simple credit card ideals. Are low-rate credit cards really cheaper? Yes, definitely a low-rate credit card can save you plenty of money in interest payments if you are carrying a balance on your credit card, when compared with a high rate credit card. However, if you have an existing card balance, you may like to consider a zero-interest balance transfer credit card or budgeting to avoid all credit card interest charges. Just having a slightly lower interest rate can make a big difference to the overall amount that you pay. If you have a balance of $3,000 on your card and you plan to pay it off over nine months with a 20 per cent p.a. interest rate, you’ll pay around $240 in interest. If your card had an annual interest rate of 12 per cent, however, you’d only pay around $144 in interest on the same balance and with the same repayment schedule. This is a saving of almost $100; money that you’d otherwise be giving away, essentially. How are interest rates calculated? Although you’ll see your interest rate displayed as “p.a.” (which stands for “per annum”) or the annual rate, the interest on your balance is calculated daily and charged monthly. So, for each day that you don’t make a payment, the interest compounds. “Even though interest is ‘per annum’ – it is calculated daily and charged monthly” Credit cards – what does it all mean? There is a lot of jargon and special terms that go with credit cards. Do you know the difference between the purchase rate and the cash advance rate? The difference between per annum interest and ‘calculated daily’ interest? What about international fees? Do you know what these credit cards words and phrases mean: Comparing low rate credit cards It’s not just a case of asking “what is the cheapest credit card in Australia”, although that’s certainly something to aim for. There are a few other factors you should think about before choosing your ideal option. Credit card interest rates Interest is advertised per year and is the amount of extra money the bank or card issuer charges you for the service and credit they provide to you. But the annual rate is divided by the number of days in the year and calculated daily, so it is the daily balance that really counts. That is the balance that will attract interest, every single day. So, paying off your card within the interest-free period is the best way to minimise repayments. The interest rate determines much of your monthly repayment but also look at your interest–free periods on purchases and also examine any introductory periods of low interest. Credit card introductory period Many cards offer an introductory, or promotional, period of low or no interest. Introductory periods usually last for between six and 18 months, although some are shorter or longer, and they’re great for paying down debt. However, any remaining balance left at the end of this period will attract the lender’s standard interest rate, so watch your calendar. Credit card “standard interest rate” With low rate cards, the standard interest rate is somewhere between eight per cent p.a. and 15 per cent p.a. and while this is higher than the zero rate of an introductory offer, it’s ongoing so is a better long–term solution to managing money. Credit card cash advance rates The interest applied to cash advances is higher than the rate applied to purchases – sometimes as high as 23 per cent p.a. or even higher. This rate goes onto ATM cash withdrawals, currency exchanges overseas and gambling. Credit card interest–free period on purchases Many credit cards have interest–free days on purchases if you pay your balance in full within the statement period. These days vary from zero up to 55, with a few exceptions. The fees and charges Some low rate cards have no annual fee for the first year, while others charge between $50 and $100. Do the maths before applying for a card with an annual charge as the fee might eat up your savings. International fees Even low rate cards might apply charges to international transactions, so check this out as the fee can be three per cent of the transaction amount. Credit card minimum repayment You must make at least a minimum payment on your balance each month and this is often calculated as a percentage of the balance, usually between two per cent and 10 per cent. Extra frills and features Cheaper cards usually have fewer additional features than the more expensive ones, which can have frequent flyer schemes and similar perks. You can, however, still earn rewards points with some low rate cards and even though the earn rate might be lower, it’s still worth building them up. A few of the cheaper cards also offer complimentary insurance, but make sure this is suitable and cost–effective for you first. Cashback Another thing to look out for is cashback with some cards, although you need to be sure that the structure fits with your spending, as these rewards could knock a few more dollars off your annual spend. Applying for a low rate card As with all financial products, you should compare what’s on offer before selecting your best option. Once you’ve made your choice, click through to the lender’s site and start the application. The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible. The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.