What is a cheap credit card?
The banks offer many credit card deals to attract customers in an increasingly competitive market. In reality, there is no single cheapest credit card. What works out as the cheapest for you depends on how you use your card and your spending habits. Use our free and easy comparison service to find the cheapest deal for you, apply online today and start enjoying your new card’s cheaper interest rates without delay.
David Boyd, co-founder of CreditCardCompare.com.au, explains, "Choosing a cheap credit card depends on how you use it and manage your finances, so knowing what type of cardholder you are is important when selecting the cheapest deal."
Key features of cheap credit cards
A cheap credit card typically has a low interest rate and minimal fees. The main features to look for are:
- Low purchase interest rate (under 10% p.a.)
- Low or no annual fee
- Long interest-free periods (up to 55 days)
- No balance transfer fees
Low rate credit cards can have interest rates as low as 7.49% p.a. This is much lower than the average credit card rate of around 20% p.a.
Some cards also offer $0 annual fees, which can save you $50-$100 per year compared to standard cards.
How to choose a cheap credit card
Once you know which type of card you want, you should examine the features of each deal to find the cheapest one.
Purchase rate
This is the interest rate applied to the balance on your credit card account, so it’s very important when comparing deals, especially if you don’t always clear your monthly balance in full.
Annual fee
The annual charge pays for maintaining your credit card and any extras, including rewards schemes and insurance policies. The annual fee should not outweigh the savings you make on the card’s other features, such as a low purchase rate. If you always pay your monthly balance in full, however, a card with no annual fee could be the cheapest choice for you.
Introductory offers
Many deals feature a special offer of low rate balance transfer, low purchase rate, or a combination of the two for a promotional period, making it much cheaper to use your credit card. If there is a special offer on the card you are considering applying for, make sure the other features don’t negate the savings you make, and be aware of how the deal changes when the promotion ends.
How to apply for a cheap credit card
Once you have found the card you want, simply click the ‘Application’ button and start the simple and secure online application process. With many banks, you should get a preliminary decision almost immediately, and if approved, receive your new card in the post a few days later.
