Low-rate credit cards

As the name suggests, low-rate credit cards offer a lower interest rate than average, which could save you a lot of money compared with other types of credit card.

The term 'Low-rate credit cards' usually refers to an interest rate below average, but there are also some credit cards which charge 0% interest on purchases.

Advantages

A low-interest credit card could save you a lot of money compared with a card carrying a higher interest rate if you cannot repay the balance in full each month.

The low rate can make this type of credit card a good alternative to a personal loan - with some credit cards offering interest rates even lower than the most competitive loans. Plus it's more flexible - you'll only be required to make a minimum payment each month, usually around 3% of the balance, but you can pay more if you wish.

Finally, most low-rate cards don't have an introductory period - your rate will stay the same for as long as you keep the card.

Disadvantages

Low-interest credit cards are usually only available to people with a very good credit rating. Most don't offer any other benefits, either - the low interest rate is often the only real advantage.

Also remember that even though the interest rate is lower than most cards, interest could still add a lot to your total repayment if you don't pay everything back in good time.

Find the low-rate credit card deal you're looking for with our free credit card comparison tool.

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