Low Interest Credit Cards
Compare low-interest credit cards, starting from a record-low of 9.95% p.a + balance transfer offers
Updated 10 January 2021
If you're looking to make a big purchase or find it a little tricky to keep up with credit card payments, a low-interest credit card can certainly help relax your finances. This guide walks you through the benefits and limitations of a low-interest credit card, and compares the offers, deals and fees from the most affordable cards currently available.
If you're looking to make a big purchase or find it a little tricky to keep up with credit card payments, a low-interest credit card can certainly help relax your finances. This guide walks you through the benefits and limitations of a low-interest credit card, and compares the offers, deals and fees from the most affordable cards currently available.
Best Deals
What is a Low Interest Credit Card?
- A low interest credit card is exactly what is says.
- It won't offer any perks like rewards, cashback or Airpoints dollars, but the interest rate will be considerably lower.
- Most low interest credit cards come with some form of balance transfer, so you get the best of interest-free periods on existing debt and low interest on ongoing debt.
- Like any credit card you can avoid interest altogether by clearing your balance in full every month.
Picking the Best Low Interest Credit Card
- The trick is to pick a card with a low interest rate, a zero (or very low) fee, interest free terms on balance transfers and some sort of interest-free period for new purchases. When chosen correctly, the right card will maximize your savings available.
- Credit card interest is a killer, so the lower that is, the better the card. But watch the fees - our best buys below consider fees and interest rates to ensure you get the best deal.
- We recommend you consider lowering the credit limit so you can still use but restrict it somewhat so it stays focused on more essential purchases. Even 13% p.a. interest rates are a high form of finance.
4 Rules of Low Interest Credit Cards
Before you apply for a low interest credit card, we have outlined 4 rules for doing it right and protecting your finances in the long term.
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Prioritise repaying your balance on time (unless you have more expensive debts somewhere else)A low interest credit card offers the perfect conditions NOT to repay, but unless you're paying off more expensive debt somewhere else it makes complete sense to clear your credit card on a monthly basis.
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If you're struggling, make sure to meet the monthly minimum repaymentsYour low interest credit card will have a minimum payment of between 2% and 5% of the closing balance. For example, if you owe $1,000 you'll need to pay between $20 and $50 depending on your card's term. If you don’t, you’ll be charged penalties. You should plan to pay more than the minimum unless you have more expensive debt to pay. Read our guide to minimum payments here.
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Get your credit score in good condition before you applyThe key when applying for low interest credit cards is to have strong credit; evidence of defaults or late payments will raise red flags for banks who may refuse to accept your application. Read our guide to credit scores and credit reports where you can request your details and fix any errors.
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Combine a low interest offer with a balance transferAll of our best buy offers below come with a balance transfer, and they're a great option if you need some breathing space. But, balance transfers work best when you make regular repayments. Divide any transferred balance by 12 (if it's a 12 month offer) and be sure to keep some money aside to make regular installments to pay it off. Otherwise interest is charged from day 1 of the interest-free period ending.
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Best Buy Low Interest Credit Cards
Our research has shortlisted the best deals available right now. These include:
Best Low Interest Credit Card - Kiwibank Low Rate VISA
Our View: This is by far the best low interest credit card on offer - 9.95% is likely to be a record-low interest rate in New Zealand. While the annual fee is $30, the balance transfer offer is attractive and there is up to 55 days of interest free.
The deal:
What you need to know:
The deal:
- Interest rate: 9.95% p.a.
- Annual fee: $30
- Interest Free Offers on Purchases: No
- Balance transfer: 1.99% p.a. for 6 months
- Monthly payments: Must be above the monthly minimum (either 5% or $20 of the balance owing - whichever is greater)
What you need to know:
- Balance Transfers: You must request a balance transfer in the first 30 days to get the 0% interest period and you can't transfer a balance from another Kiwibank card.
- For more details or to apply, click here.
Runner Up Low-Interest and Zero Fee Credit Card - ASB VISA Light
Our View: An excellent offering - not only is it fee-free, you also qualify for ongoing six month interest free terms on any purchase over $1,000. While it may not beat the market with the interest rate compared to the Co-Operative Bank and AMEX low interest options, it's no more than 0.50-0.75% higher and the free fees more than compensate.
The deal:
What you need to know:
The deal:
- Interest rate: 13.50% p.a.
- Annual fee: $0
- Interest Free Offers on Purchases: Yes, 6 months interest free on purchases over $1,000
- Balance transfer: Up to 6 months at 0%
- Monthly payments: Must be above the monthly minimum (either 3% or $10 of the balance owing - whichever is greater)
What you need to know:
- Balance Transfers: You must request a balance transfer in the first 30 days to get the 0% interest period and you can't transfer a balance from another ASB card.
- For more details or to apply, click here.
Worth Considering - Low Interest Credit Card - BNZ Lite Visa Card
Our View: BNZ's offering includes 0% interest free for 12 months on balance transfers, six months of card fee waivers and 12.90% p.a. interest. This represents a great deal in the short term and ongoing. While it may not beat the market with the interest rate compared to the Co-Operative Bank and AMEX low interest options, it's no more than 0.50-1.00%.
The deal:
What you need to know:
The deal:
- Interest rate: 12.90% p.a.
- Annual fee: $30
- Interest Free Offers on Purchases: Not offered
- Balance transfer fee: Up to 12 months at 0%
- Monthly payments: Must be above the monthly minimum (either 2% or $25 of the balance owing - whichever is greater)
What you need to know:
- Balance Transfers: You must request a balance transfer in the first 30 days to get the 0% interest period and you can't transfer a balance from another BNZ card.
- For more details or to apply, click here
Worth Considering - Low Interest Credit Card - Co-operative Bank Low Interest MasterCard
Our View: With a 12.95% interest rate, a low $20 annual fee and a 0% balance transfer for up to 6 months, the Co-Operative Bank's low interest Mastercard offers a market-busting interest rate with low fees.
The deal:
What you need to know:
The deal:
- Interest rate: 12.95% p.a.
- Annual fee: $20
- Interest Free Offers on Purchases: Not offered
- Balance transfer fee: Up to 6 months at 0%
- Monthly payments: Must be above the monthly minimum (either 3% or $10 of the balance owing - whichever is greater)
What you need to know:
- Warning: The credit card has higher than normal Foreign Currency Conversion Fee (2.6% vs 1.85%-2.25% standard range from other bank)
- For more details or to apply, click here.
Best of the Rest - AMEX, Westpac and ANZ Low Interest Credit Cards
AMEX, Westpac and ANZ all offer Low Interest Credit Cards, but at this time we've chosen not to include them as best buys.
- AMEX Low Rate Credit Card: Despite offering the lowest interest rate of 12.69% p.a., there is a $59 annual fee and the balance transfer offer is limited at 2.99% for six months. Read more on the AMEX website.
- Westpac Low Rate Mastercard: Westpac offers a fair interest rate of 13.45% p.a. and 5.95% for life for any balance transfer. The annual fee is fixed at $25. Read more on the Westpac website.
- ANZ Low Rate Visa: This card has lowered their interest rate to help relieve financial pressure through the (Covid-19) pandemic (9.95% p.a.), a 12 month balance transfer at 1.99% and with $0 annual fee. After 30 September 2020, the standard purchase and cash advance rates of 12.90% p.a will apply. Read more on the ANZ website.
Low Interest Credit Cards Best Practice
- If you have an existing credit card that you're struggling to pay off, applying for a low interest credit card is a recommended way to keep ongoing interest costs down.
- Combine it with a balance transfer offer and you can save even more in the short term.
- Set a credit limit you're comfortable with, and be sure to make MORE than the minimum payments every month to save on interest costs. A direct debit to settle the entire balance owed is the best way to avoid interest charges.
Do you use a low-interest credit card?
If you would like to share any tips or insights from your personal experience, please email our research team.
If you would like to share any tips or insights from your personal experience, please email our research team.
