NEW YORK (MainStreet) — Rewards cards, while certainly enticing, aren’t for everyone. People who plan on carrying a balance should forgo signing up for swanky points programs since these cards tend to carry higher interest rates (as well as annual fees) that can quickly negate their incentives.
Instead, those types of cardholders are better off applying for a credit card that carries low interest rates. Of course, just how low they should expect these rates to go is a bit relative. Annual percentage rates have inched higher during the past six months with the national average currently holding at 14.95%, according to a weekly survey from CreditCards.com, and low interest cards are currently touting an APR of around 10.4%.
According to Curtis Arnold, founder of CardRatings.com, to score a card with that kind of rate or lower, people typically need a credit score of 740 or higher. They also have to be willing to patronize smaller banks or credit unions.
“The big [banks] don’t want to deal with the low-interest market, because they have to do more underwriting and they have to be more selective,” he explains.
When it comes to major issuers, “anything under the national average is great,” says Tim Chen, CEO of credit card ranking site NerdWallet.
To help people who aren’t looking to pay through the nose for their credit card purchases, MainStreet asked experts to recommend some of the best low-interest cards on the market.
Simmons First Visa Platinum
This card offers a super-low 7.25% variable APR on purchases. It also has a low 11.25% variable APR on cash advances and doesn’t charge a fee for balance transfers or an annual fee. Cardholders are charged an amount equal to the past due payment or $25 for late payments.
Variable-rate cards change based off of the interest rate the government charges to banks. For the Simmons card, the APR is the prime rate plus 4%. If the prime rate increases, your APR will as well.
Arnold says that the card has “a proven track record and received a lot of good reviews over the years,” but adds “they’re not going to approve you in 60 seconds. The application process is very selective.”
IBERIABANK Visa Select
Another highly selective but stellar low-interest card is the IBERIABANK Visa Select, which offers a 7.5%, 9.5% or 11.5% variable APR to consumers, depending on creditworthiness. The card also currently features an introductory APR of 0% to 7.5% on purchases for the first year, also depending on how good your credit score is. There is, however, a $35 annual fee for the card and a 3% charge on balance transfers. Late payments will also incur a $35 fee.
Visa Platinum Preferred Credit Card from Associated Credit Union
Not all credit unions will require a perfect credit score to net a competitive interest rate. According to Chen, Atlanta-based Associated Credit Union – which allows new members to apply online – offers its Visa Platinum Preferred credit card with a 9.9% APR to members with a FICO score higher than 680.
“It takes a 600 FICO to qualify for their 12% Visa Card,” Chen says.
The card carries no annual fee and there is also no charge for balance transfers. You will get charged a $30 penalty for late payments.
PenFed Promise Card
Beverly Harzog, credit expert of Credit.com, recommends the Promise Card from PenFed credit union, which currently features a low 7.49% introductory rate on purchases for the first 36 months you have the card. After the introductory period is over you get a 9.99% rate, Harzog says. The As previously reported, membership in this credit union is a bit of a formality as everyone is eligible to join if they make a one-time $15-$20 donation to one of the nonprofit organizations associated with PenFed.
Capital One Platinum Prestige Credit Card
If you’re looking to stick with a major issuer, Harzog recommends the Platinum Prestige. The card carries a 10.9% to 18.9% variable APR, depending on how good your credit score is. However, it also features a 0% six-month introductory rate on balance transfers and purchases that can help those already carrying some debt on an existing card. The Prestige also has no annual fee.
Transferring a high balance to a card with a low teaser rate for an extended period of time is another option for those with debt when it comes to finding a new credit card. Discover some of the best balance-transfer cards currently on the market in this MainStreet roundup.