Editorial Policy

How to Get the Best Low APR Credit Cards

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By Eva Norlyk Smith, Ph.D.
May 22, 2009

Compared to the tantalizing offers of 0% APR balance transfer credit cards, cash back credit cards and rewards credit cards, low APR credit cards may seem like the plain Jane of the credit card family. However, as the economy worsens, cash-strapped consumers might want to give low APR credit cards a second look.

As the name implies, low APR credit cards come with a low annual percentage rate as its main advantage over the long run. Balance transfer credit cards may lure you in with promises of 0% APR, however at the end of the promotional period, that interest typically reverts to a much higher interest rate, as high as 19.99% per year. Many rewards credit cards and cash back credit cards also come with a higher than average interest rate.

Low APR credit cards can save a considerable amount of money over time, and should be the card of choice for people who need to carry a balance on their card from month to month. Low interest credit cards can also be useful instruments for consolidating higher interest loans onto one card with a lower interest rate.

To see the savings power of a low APR credit card, take this example. Let’s say you carry a $5,000 balance on your credit card, which you pay off with the minimum monthly payment every month. For a credit card with a 19.99% APR, it would take you 30 years and 9 months to pay off the balance. In that time you’d have paid $9,464.79 in interest, almost twice as much as the original amount.

In contrast, for a low interest credit card with a 7.9% APR, at the minimum monthly payment it would take 15 years and 4 months and only $1,739.56 in interest to pay off the card. (The moral in both cases? Never pay just the minimum balance on your cards!)

Unfortunately, getting approved for a low APR credit card is not as easy as for a 0% APR balance transfer offer. Many credit card offers promise an APR as low as e.g., 7.99%. However, this is a teaser rate; and unless you have excellent credit, the actual APR you will be approved for will be higher.

The best low APR credit cards include Pulaski Bank Credit Cards and Simmons First Visa Platinum. The Pulaski Bank card offers 0% APR for the first six months and no-fee balance transfers, offers that are increasingly hard to come by.

The Pulaski Bank Credit Card also comes with some of the most forgiving default terms in the industry. If you are late with a minimum payment or if a minimum payment from a preceding billing period remains unpaid, the card will default to a penalty APR of 22%. However, unlike other credit cards, the default rate only stays in effect until the account is brought to a current status, after which it reverts to the low APR.

The Pulaski card does come with a $35 annual fee, but if you carry a balance over an extended period of time, the savings from the lower APR will easily pay for the fee, and then some.

Simmons First Visa Platinum also offers a very competitive APR and it does not come with an annual fee. It charges a higher APR on cash advances and convenience checks along with a 3% cash advance fee. The Simmons First Visa Platinum has a fairly low default APR, which will be triggered if two payments are received late within a six-month period. The penalty APR reverts to the standard APR if the next six consecutive payments are received on time.

Like all forms of credit, you have to earn good terms. You have to have a very good or excellent credit score to get approved for the best low APR credit cards. And with the lowest APR credit cards, you may start out with a low credit limit. However, you can request a credit limit increase once a year and build your credit line over time. For the convenience of inexpensive credit, it can be worth the wait.