Low Interest Credit Cards

Low interest credit cards are perfect for people who want to carry a balance. However, choose with care because those low interest rates come at a cost.

What Are Low Interest Credit Cards?

Low interest credit cards are a must-have for people who are planning to carry a balance instead of paying off their credit card debt at the end of each month. After all, an unpaid balance means interest payments, which can make a purchase much more expensive than if the credit card user had just used their own money instead of borrowing. As a result, if someone is planning to carry a balance, they should make sure to choose a credit card with low interest rates.

Low Interest Credit Cards

With that said, it is important to note that people tend to use low interest credit cards to refer to credit cards with interest rates that are lower than those of their counterparts. In short, each credit card comes with a particular package of features that must be paid for in some manner. As a result, more high-value features tend to be correlated with more costs, whether that means more fees or higher interest rates.

This should be distinguished from credit cards that offer a range of interest rates, which will be higher for some people and lower for others. In these cases, this is because of the consumer’s creditworthiness, which can be summed up as their ability as well as their willingness to pay their debts. Something that tends to be assessed using the FICO credit score calculated using five factors such as payment history, the length of payment history, and credit utilization ratio. Simply put, credit card issuers are willing to offer lower interest rates to people with better creditworthiness because there is less risk, whereas the reverse is true when a consumer is either an unknown risk or has been proven to be a risk.

What Are the Upsides and Downsides of Credit Cards with Low Interest Rates

As stated earlier, the main upside to a credit card with low interest rates is that the consumer can reduce their costs when they choose to a carry a balance on it. The lower the interest rate, the easier the time that they should have paying off their credit card debt. Something that should free up more money that can be spent elsewhere.

Unfortunately, the downside is that credit cards with low interest rates tend to have fewer high-value features. For example, a credit card with low interest rates might not have a rewards program because offering rewards would render it unprofitable for the credit card issuer.

With that said, it is important to note that different credit cards offer different features, meaning that it is difficult to make generalizations about what they can and can’t do. As a result, if you are interested in minimizing the interest payments on your credit cards, you shouldn’t swallow too many assumptions but instead see what options are available to you with the help of Bonsai Finance.

How Can You Get the Right Interest Rate on Your Credit Card?

Get your low interest credit cards for your particular needs and circumstances. We can connect you with the financial service providers that can do exactly that.

Moreover, our expertise and experience enable us to not just provide you with sound advice about the financial products that should be most useful for you but also help you look through more options than you knew existed. This is critical because there are a lot of credit card issuers out there with a lot of credit cards, meaning that you will have a much better chance of finding the right credit card with the right interest rate if you have some professional help on your side.

Choosing Between Low Interest and Rewards Cards

As mentioned above, low interest credit cards Canada are usually an either-or proposition – that is to say, you can usually only get a card with either a low purchase interest rate or a rewards program, but not both. This reality forces consumers to figure out their priorities before they ever apply for a credit card. Most people tend to prefer rewards cards for obvious reasons, but there are many instances in which a low interest card is simply the most responsible option to take. 

The savings that a low interest card stands to generate for its holder are fairly substantial, but it’s important not to overstate how useful they are. Some carry incredibly low rates that don’t break into the double digits, although these are rarer than the standard versions and usually impose stricter credit requirements that not many people will meet. In general, though, you can expect a discount of just a handful percentage points in yearly interest as compared to standard options. For most people carrying a low-to-moderate balance for relatively short periods and actively trying to pay more than the bare minimum every month, this will likely produce less than $100 in savings – sometimes much less.

The people who really need low interest credit cards are those who often carry a high balance or those who know they have a habit of only paying the minimum required amount on their credit statements each month – in short, those who have bad credit habits. In these cases, the savings can be much more substantial and there is no uncertainty about whether or not you will get them, making low interest credit cards Canada the best choice for that particular situation. You may also prefer a low interest card if you know you do not often remember to redeem your points for reward programs, or if you are simply a cautious person in general.

Conversely, there are some instances in which a low interest card may not be a good choice for you. The low interest rate will not be of use to you if you always pay off your balance each month in full. This is ideal credit card behaviour, but many Canadians fall short of that standard. Another such instance is when you have access to other, more exclusive and appealing credit card options. If you have a fairly good income and decent credit, you may be able to qualify for some of the mid- or even high-tier cards available on the Canadian market. These cards tend to offer much better reward rates than the basic versions that most people settle for, and that makes them a much more tempting prospect in comparison. In that case, it may be worth your while to choose one of those cards instead and simply buckle down enough to try to reform your credit habits. It’s up to you to figure out if you feel equal to that task.

Getting Out of a Bad Financial Situation

If you’re one of those people with bad credit habits we’ve talked about previously, you know first-hand how hard it can be to recover from a pronounced debt problem. Low interest credit cards Canada can help you with that if you use them right. Many of these cards will allow you to perform a balance transfer with them to take advantage of their low rates on your existing debt, and you can often even score promotional rates as low as 0% on these transfers in some cases.

Paying off the debt in its entirety will still probably be a struggle, but cutting fees and other charges in any way you can is critical to shortening the length of time it takes you to get back on your feet. Any money you save is money you can put toward paying down your balance and becoming debt-free. If you manage to do this, you will not only have gotten rid of a heavy financial burden weighing you down, but also probably improved your credit score significantly along the way.

Providing Your Own Safety Net

Another situation where low interest credit cards Canada are often preferable is when the applicant is living with very little income. In cases like this, it’s much more likely that you might have to use the card for necessities that you can’t go without, and also that you might struggle to pay back the entire amount you’ve spent each month. In other words, paying some amount of interest is almost inevitable, and when you’re running low on money as it is, that’s something you need to avoid.

Having a low interest credit card around to help with these expenses may ease the burden of that insecurity. Not only do you have the option of using your card to get what you need right away, but if it takes you a little longer than you’d like to pay that money back, you’ll accrue significantly less in interest charges than you would if you had used a standard card. You’ll be able to pay off that remaining balance sooner this way and hopefully avoid becoming overburdened by debt that grows faster than you can repay it. This situation may only be hypothetical a lot of the time, but if it ever comes to pass, you’ll be happy that you had the foresight to account for it before things became dire. 

We’re Your Guide to Low Interest Credit Cards Canada

low interest credit cards canada

If you’ve never investigated this type of credit card before, you might be surprised at how much they can vary from provider to provider. While they almost never add rewards into the mix, many low interest credit cards carry wildly different rates. Some may allow balance transfers while others deny them, and some may provide benefits that others do not. How do you know which to choose?

If you’re uncertain about where to look next in your search in your search for low interest credit cards Canada, allow Bonsai Finance