5 Tips for Qualifying for a Low-Interest Credit Card

Even though we all know it’s best to pay off our credit card bills in full every month, sometimes it’s not possible. The great thing about credit cards is that they offer the flexibility to carry a balance when you need to—but it does mean having to pay interest. If you need to carry a balance on your credit card frequently and want to reduce your interest charges, a low-interest credit card may be a good option for you.  

A low-interest credit card offers a lower annual percentage rate (APR) compared to a standard credit card, making it easier to manage your finances without high costs. For instance, while a standard credit card might have an interest rate of 20%, a low-interest card might offer a rate of 14%. The lower rate can reduce your interest payments and help you achieve your financial goals faster.   

How to qualify for a low-interest credit card 

If you’re trying to reduce your monthly interest payments, switching credit cards may help. Here are five ways you can improve your chances of qualifying for a low-interest credit card.

1)Check your credit score

You typically need a good credit score to qualify for a low-interest credit card. Before you start searching, know where you stand by checking your credit score. You can request a free credit report from one of Canada’s credit bureaus, Equifax or TransUnion. Some banks also allow customers to access their credit score for free through online banking.  

If your score isn’t as high as you’d hoped, review your report carefully to see if there are any mistakes or signs of fraud. If you notice an issue, you can contact the credit bureau to dispute the error.  

If there are no mistakes, consider whether you’re prone to any bad credit habits. Late payments, maxing out your credit card, and applying for credit too frequently are all actions that can cause your credit score to drop.    

Remember, a higher credit score can help you qualify for more credit, often with a lower interest rate and better terms. 

2)Make on-time payments

If you want to improve your credit score before applying for a low-interest card, focus on paying your bills on time, every time. Your payment history accounts for the largest portion of your credit score. If you can’t pay your entire balance each month, at least make the minimum payment. To avoid late or missing payments, consider setting up automatic payments. 

3)Keep your credit utilization low

Your credit utilization ratio describes the amount of available credit you’re using. Ideally, you want to keep your credit utilization at 30% or less. For example, if you have $10,000 in available credit, you want to use less than $3,000 at a time.  

Maxing out your credit cards or carrying a high balance acts as a red flag to lenders by making it seem as if you have trouble managing your credit. 

4)Research different card providers

Take some time to research the different low-interest credit cards available. Compare eligibility criteria, including credit score and minimum income requirements.  

Consider other key factors such as:  

• Annual fees. Some cards charge a yearly fee. In many cases, these cards offer better perks and rewards. 
• Annual percentage rates (APRs). If your goal is to save money with a low-interest card, then you’ll want to compare interest rates.  
• Balance transfer fees. Many cards charge you a fee equal to a small percentage of the balance you transfer from a high-interest card to a low-interest card. 
• Introductory offers. Some cards offer very low introductory interest rates, such as 0% interest on balance transfers for a specified period of time (often six to 12 months).  Some introductory offers may also waive the annual fee for the first year. 
• Foreign transaction fees. If you travel frequently or make international purchases, you may want a card that comes with no foreign transaction fee. 

5)Choose a credit card

Once you’ve decided on a low-interest credit card, you can typically apply online, over the phone, or in person.  

To qualify for a low-interest credit card, you usually have to meet the following basic requirements:  

• Be a Canadian citizen or resident 
• Be the age of majority (18 or 19, depending on your province) 
• Have a good credit score  
• Meet minimum annual income requirements  

If you’re approved, you can start using your low-interest credit card once it’s been issued, either digitally or through the mail.  

What if I don’t qualify for a low-interest credit card? 

If your application for a low-interest credit card is denied, there are things you can do to increase your odds of approval in the future. First, make sure you meet the eligibility criteria of the card you want. If necessary, focus on improving your credit score or consider applying for a different kind of card in order to build more credit history. Make an effort to use credit responsibly and try again when you’re ready.  

Is a low-interest credit card right for you? 

If you have good credit, typically carry a balance on your credit card and want to reduce your interest payments, it makes sense to look into low-interest credit cards. Remember to factor any fees and introductory offers into your consideration and continue to use credit wisely after you’re approved.

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