Does a low rate credit card suit your needs? – RBC Royal Bank

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• As with any credit card, it’s important to consider the fees, interest rates, and pros and cons associated with each card to find the one that’s best for you.

When it comes to interest rates, the lower the better. But is this really true?

It depends on your financial situation and your goals.

A low-rate credit card may be the ideal choice for saving on interest, but it can come with trade-offs that aren’t right for everyone. Read on to learn more about how low rate credit cards work and to determine which low rate credit card suits your needs.

What are the benefits of a low rate credit card?

Let’s start with the basics: What are the benefits of choosing a low rate credit card? In short, the lower the interest rate, the less interest you pay on your card balance.

If you have a low-rate credit card or transfer the balance from a high-rate credit card to a low-rate card, you’ll pay less interest each month. This means you’ll have more money available to pursue other goals, including the ability to use that money to pay off your debt faster.

Let’s see how it works in practice:

Card balance$5,000 $5,000 Interest rate (fixed)20.99% APR 12.99% APR Monthly interest charge (for a 30 day month) $86.98$53.66 Repayment period with monthly payment of $100 10 years 6 years, 1 month Total interest paid $6,991.87 $2,258.74

	Standard credit card	Low rate credit card

Result : You save 4 733,13 $ in interest over the duration of the debt and you shorten the repayment period of almost four years.

Factors to Consider When Choosing a Low Rate Credit Card

Consider the factors below to choose the card that’s right for you.

1. The card’s interest rate

As the name suggests, you generally pay less interest on a low-rate credit card compared to a standard credit card. But there are two types of low rate credit cards, and each offers its own benefits and points to consider.

Fixed Interest Rate Credit Cards

With a fixed interest rate credit card, you maintain a reduced interest rate for as long as you use the card. A fixed interest rate makes financial planning easier because it allows you to easily calculate your interest costs. It also gives you peace of mind, because the card rate will not be influenced by market volatility.

Variable interest rate cards

A variable rate card, on the other hand, has an interest rate that fluctuates based on the market. If interest rates are low, you may get a lower interest rate than with a fixed rate card. The rate is also personalized based on your situation, which means you could get a lower rate if your credit score is good.

Expert Tip: Some credit cards have separate interest rates for purchases and cash advances. Make sure you know how much interest you will pay, depending on how you use your card.

2. Other fees included with the card

Find out the total cost of using the card in addition to the cost of borrowing. This includes:

• Annual fees

• Balance transfer fees

• Cash advance fees

• Fees for foreign operations

• Payment return or refused payment fees

• Overage fees

When comparing low rate credit cards, consider how you plan to use them to assess the cost of each. This will allow you to make an informed decision about what is right for you.

3. The rewards you will receive with the card

The main benefit of a low rate credit card is being able to save money on interest. As a result, few discount credit cards offer more comprehensive rewards programs than those offered by more expensive credit cards. However, some cards offer perks that will give you more for every dollar you spend.

Here are some examples:

• The ability to earn points to redeem for merchandise or travel benefits.

• Access to exclusive promotions and discounts through the card issuer’s offers program.

• Purchase coverage or an extended warranty that can protect your purchases against loss, theft or damage for a period of time after the transaction, or that extends the manufacturer’s warranty.

• Optional services, like travel insurance or identity theft protection, that you can add to your card.

How to decide if a low rate credit card is right for you

Ultimately, choosing a credit card is a personal decision. It depends on your financial situation and your goals. A reduced rate card may be useful to you if:

1. You carry your credit card balance from month to month

The higher your balance, the more advantageous it is to choose a reduced rate card.

2. You have difficulty managing debt spread across multiple credit cards

Transferring balances from several higher-rate credit cards to a lower-rate credit card can help you manage your debt by consolidating several monthly payments into one.

3. Rewards are not your priority when choosing a card

If, on the other hand, rewards are very important to you, consider choosing a rewards credit card instead.

Find a low rate credit card that meets your needs

RBC offers a range of low rate credit cards, including fixed interest rate cards and variable rate cards, to meet a variety of needs. Learn about available low-rate credit cards and start completing your application by visiting us online.

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